NFRA Imposes 1 Lakh Fine on CA for Failure in Maintaining Standard Quality in Verifying Financial Statements [Read Order]
NFRA Imposes 1 Lakh Fine – NFRA – CA – Maintaining Standard Quality – Financial Statements – Standard Quality – Chartered Accountants – Taxscan
NFRA Imposes 1 Lakh Fine – NFRA – CA – Maintaining Standard Quality – Financial Statements – Standard Quality – Chartered Accountants – Taxscan
The National Financial Reporting Authority (NFRA) imposed a 1 Lakh fine on Chartered Accountants (CA) for failure in maintaining Standard Quality in verifying financial statements.
CA Riya Agarwal of M/s Shekhar Sharad & Co., Ramgarh, who is a member of the Institute of Chartered Accountants of India (ICAI) and was the Engagement Quality Control Review (EQCR) Partner for the statutory audit of Burnpur Cement Limited, West Bengal ('BCL' or 'the company') for the Financial Year (FY) 2017.
BCLI is a company dealing in the business of Cement Manufacturing and was listed on National Stock Exchange (NSE). BCL was required to prepare its Financial Statements (FS) for the FY 2017-18 by Indian Accounting Standards (Ind AS), as notified by the Ministry of Corporate Affairs under Companies (Indian Accounting Standards) Rules, 2015.
As per Para 6(c) of Standards on Quality Control (SQCs ) SQC 1 and Para 7(b) of SA 220, the "engagement quality control review" is a process designed to provide an objective evaluation, of the significant judgments the Engagement Team made, and the conclusions reached in formulating the Audit Report. As is set out in this Order, the EQCR partner failed to meet the relevant requirements of the Standards on Auditing (SA).
The NFRA proceeded to take action under sub-section (4) of section 132 of the Act, and a Show Cause Notice was issued to EQCR partner on 03.11.2022 under Rule 11 of the NFRA Rules 2018
It was found that the CA failed to exercise due diligence, and was grossly negligent in the conduct of professional duties and obtaining sufficient information which is necessary for the expression of an opinion, or its exceptions are sufficiently material to negate the expression of an opinion
It was established that the EQCR partner reviewed by routinely ticking a yes/no checklist and signing on some of the WPs prepared by the ET. The work of the EQCR partner is not separately identifiable from that of the ET, which raises serious doubts about the performance of her statutory obligations.
A three-member coram comprising Dr Ajay Bhushan PRASAD Pandey, Praveen Kumar Tiwari and Smita Jhingran concluded that the EQCR partner has committed Professional Misconduct as defined under section 132 (4) of the Companies Act 2013 in terms of Section 22 of the Chartered Accountant Act 1949. Further imposed a fine of one lakh rupees.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
