The National Financial Reporting Authority (NFRA) has imposed a ban on one audit firm and 4 auditors for lapses in auditing of Coffee Day Global Ltd and MACEL during 2018-19 fiscal.
Coffee Day Global Ltd (CDGL) and Mysore Amalgamated Coffee Estate Ltd (MACEL) are subsidiaries of listed-entity Coffee Day Enterprises Ltd (CDEL). The case pertains to diversion of funds worth Rs 3,535 crore from seven subsidiary companies of CDEL to MACEL.
Recently, the stock market regulator SEBI has shared its investigation report in April 2022, resulting in NFRA probing the professional conduct of the statutory auditors of CDGL.
Separately, NFRA has imposed a fine of Rs 5 lakh and slapped a five-year ban on Lavitha Shetty, who was the statutory auditor for MACEL during 2018-19 period. In connection with CDGL, the audit regulator has slapped a fine of Rs 1 crore on audit firm ASRMP & Co, Rs 10 lakh on A S Sundaresha and Rs 5 lakh each on Madhusudan U A and Pranaav G. Ambekar and CA Lavita Shetty.
After considering the facts, the NFRA ordered the following;
a) Imposition of a monetary penalty of Rs One Crore only upon Mis ASRMP & Co. In addition, Mis ASRMP & Co. is debarred for a period of two 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.
b) Imposition of a monetary penalty of Rs Ten Lakhs only upon CA A. S. Sundaresha. In addition, CA A. S. Sundaresha 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.
c) Imposition of a monetary penalty of Rs Five Lakhs only upon CA Madhusudan U A. In addition, CA Madhusudan U A 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.
d) Imposition of a monetary penalty of Rs Five Lakhs only upon CA Pranaav G. Ambekar. In addition, CA Pranaav G. Ambekar 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.
Further, Rs. Five lakhs penalty was imposed on CA Lavita Shetty and debarred for 5 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.
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