NFRA Imposes Penalty on Auditor Despite Issuance of Qualified Opinion
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- By Taxmann
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- Last Updated on 3 August, 2023
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The National Financial Reporting Authority (NFRA) is actively issuing one after another order against the auditors citing their deficiency in maintaining the quality of audit. Based on the letter received from the Registrar of Companies (ROC), NFRA initiated an investigation into the statutory auditor of the company. Wherein, the company had a negative net worth, negative working capital, and high debts. All these factors were sufficient for the auditor to cast significant doubt on the uncertainty of going concern in the preparation of financial statements of the company.
Considering the above facts, the auditor included the Emphasis of Matter Paragraph (EOM) in the auditor’s report. In addition to this EOM, the auditor has also expressed a qualified opinion on other significant elements of financial statements.
Though the uncertainty of going concern was reported under EOM para, the same was not the basis of qualified opinion. Hence, NFRA held the auditor guilty of professional misconduct and imposed a monetary penalty on him.
To know the auditor’s viewpoint for including uncertainty of going concern under EOM para and NFRA’s contention to hold the auditor guilty of misconduct.
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