CA Fails to report Non-Compliance with Format of Financial Statements with Other Professional Misconduct: NFRA imposes Rs. 1 Lakh Penalty [Read Order]
CA – Fails to report – Non-Compliance with Format of Financial Statements – Non-compliance – Professional Misconduct – NFRA – Penalty – Taxscan
CA – Fails to report – Non-Compliance with Format of Financial Statements – Non-compliance – Professional Misconduct – NFRA – Penalty – Taxscan
The National Financial Reporting Authority (NFRA) imposed Rs. 1 lakh penalty on a Chartered Accountant CA Gautam Guha who failed to report the non-compliance of the company with the format of the financial statements. The NFRA also identified additional instances of professional misconduct, leading to the imposition of the penalty.
CA Gautam Guha, a Partner at Ws G. Basu & Co. located in Kolkata. He is also a member of the Institute of Chartered Accountants of India (ICAI) and served as the Engagement Partner (EP) responsible for the statutory audit of M/s Nicco Uco Alliance Credit Limited (Nicco) during the Financial Year (F.Y.) 2015-16.
Pursuant to the information received from the Ministry of Corporate Affairs, regarding irregularities observed, in the financial statements of company for FY 2015-16, by the Financial Reporting Review Board of the ICAI, the NFRA initiated investigation into the role of the Statutory Auditors.
The authority, after considering the charges listed in the SCN and the reply of the CA/EP established several failures of the EP in conduct of his statutory audit of Nicco. Several deficiencies were noted in the accounts of the Company Nicco such as non-reporting of foreign currency liability of n 1.83 Crore at the closing rates as on the dates of financial statements viz.31.03.2015 and 31.03.2016, which was in non-compliance to AS 11.
Also, the EP/CA showed assets given on a finance lease of Rs. 1.81 Crore even though the lease agreements had become null and void and the assets had turned into Non-Performing Assets (NPA).
The Order established that the EP failed to report the Company’s non-compliance with Accounting Standards as well as with the format of Financial Statements prescribed by the Companies Act, 2013 and that he did not comply ,vith Standards on Auditing relevant to the audit of the Company.
After determining the professional misconduct of the Engagement Partner/Chartered Accountant (EP/CA) due to his documented shortcomings in carrying out the Statutory Audit, the authority imposed a financial penalty of Rs. 1,00,000 on the EP.
The National Financial Reporting Authority (NFRA) addressing the Auditors of the Entities, issued a circular on 26th June 2023 regarding the responsibilities of the Statutory Auditors in relation to the fraud in a company.
Read More: NFRA issues Circulars on Statutory Auditors’ Responsibilities in relation to Fraud in a Company
To Read the full text of the Order CLICK HERE
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