Key Observations from NFRA Order against Engagement Partner for Professional Misconduct

In an order issued by National Financial Reporting Authority (NFRA), a member of the Institute of Chartered Accountants of India (ICAI) has alleged for collective lack of due diligence and gross negligence in the audit resulting in professional misconduct. The key non- compliances as observed by NFRA are as below:

1. The company did not translate the foreign currency loan at the closing rate and instead carried the loan at the existing book value, thereby violating the relevant provisions of AS 11.

2. Inaccurate accounting approach being adopted by the company for leased assets. As the unpaid finance lease receivables were presented as fixed assets instead of being accounted as per the provisions specified under AS 19.

3. No disclosures were made by the company in relation to adjustments, additions, or deductions in the gross block and depreciation for the previous year in the depreciation schedule.

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