The National Financial Reporting Authority (NFRA) imposed a fine of Rs 15 Lakhs in total and debarred two Chartered Accountants for 15 years in total on the ground of non-adherence to Standards of Auditing.
National Financial Reporting Authority is a statutory authority set up under section 132 of the Companies Act 2013 to monitor implementation and enforce compliance of the auditing and accounting standards and to oversee the quality of service of the professions associated with ensuring compliance with such standards.
NFRA has the powers of a civil court and is empowered under section 132 (4) of the Companies Act to investigate for the prescribed classes of companies, the professional or other misconduct and impose penalty for proven professional or other misconduct of the individual Chartered Accountants or firms of Chartered Accountants.
The Auditors have made a series of serious departures from the Standards of Auditing (SAS) and related Quality Control Standards and Code of Ethics and the Law, in their conduct of the audit of Coffee Day Global (CDGL) for FY 2019-20. The poor quality of Audit, tampering of Audit File, the cover up in terms of submission of additional documents that did not exist in Audit File, incomplete documentation and attempt to mislead through false and evasive replies further compound the professional misconduct on the part of the Auditors.
A Three Member Bench of the Board comprising Dr. Ajay Bhushan Prasad Pandey, Chairperson, Dr. Praveen Kumar Tiwari, Full-Time Member and Smita Jhingran, Full-Time Member observed that “we conclude that the Auditors have committed Professional Misconduct as defined under Section 132 (4) of the Companies Act 2013 in terms of section 22 of the Chartered Accountants Act 1949 (CA Act) as amended from time to time.”
The Board imposed monetary penalty of Rs Ten Lakhs only upon CA A. S. Sundaresha. In addition, he is debarred for a period of ten years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.
The Board also imposed monetary penalty of Rs Five Lakhs only upon CA Madhusudan U A. In addition, he is debarred for a period of five years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
