The Supreme Court upheld the ruling by the National Company Law Appellate Tribunal ( NCLAT ) which upheld the disciplinary action by the National Financial Reporting Authority ( NFRA ) against auditors and audit firms dealing with major and publicly traded corporations.
The Supreme Court last month dismissed an appeal brought by chartered accountant Sam Varghese who was one of four auditors against whom the NFRA intervened, imposing a Rs.1 lakh penalty and barring the CA from practising for a year due to errors in the DHFL branch audit.
The NCLAT ruled that disciplinary jurisdiction over CAs remained with the Institute of Chartered Accountants of India and NFRA on a concurrent basis, noting that the latter had “superior and overriding powers” on professional misconduct.
The NFRA has increased disciplinary action against auditors and firms, particularly in pending instances such as DHFL, IL&FS, and Cafe Coffee Day, where fraud is believed to have caused the entities’ failure.
While dismissing the appeal, the Court upheld the order of NCLAT.
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