NFRA Strikes Again | Non-compliance of the Standard of Auditing and Ind AS Led to Two Years of Debarment.
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- 2 Min Read
- By Taxmann
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- Last Updated on 9 July, 2024
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NFRA is empowered under Section 132(4) of the Companies Act 2013 to investigate prescribed classes of companies and impose penalties for professional or other misconduct of the individual members or firms of chartered accountants.
The National Financial Reporting Authority (NFRA) is actively issuing one after another order against the auditors. Considering the information received from the Securities and Exchange Board of India (SEBI) regarding the failure of the statutory auditor to comply with the relevant Standard of Auditing (SA) and Indian Accounting Standard (Ind AS) while conducting the audit, NFRA commenced its investigation.
In pursuant to SEBI’s information, NFRA commenced its investigation against two Chartered Accountant firms who were the statutory auditors of the same company for different Financial Years. Based on the investigation and proceedings conducted and after giving the Engagement Partner (EP) reasonable opportunity, NFRA found the Engagement Partner (EP) associated with these firms responsible for misconduct. NFRA’s findings were based on comprehensive inquiries and after providing the EP with ample opportunity to present their case. The authority concluded that the EP was culpable for the identified irregularities and hence imposed monetary penalty of Rs 2,00,000/- and Rs. 3,00,000/- against each of the auditor. In addition to the monetary penalty, both of these firm are debarred for two years from being appointed as an auditor, internal auditor or taking any audit in respect of financial statements.
To understand the non-compliances by auditor and analysis of order
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