NFRA’s Action | CA Debarred for 5 Years of Professional Service & Imposed a Heavy Monetary Penalty

NFRA through its order stated that simply collecting and filing reams of photocopies of documents will not demonstrate the sufficiency and appropriateness of audit work. In recent times, NFRA has actively issued disciplinary orders against Chartered Accountants (CA) and imposed debarment and monetary penalties. In its recent order, NFRA holds CA accountable for violations and lapses in their professional responsibilities on the following grounds:

a) Failure to disclose material fact known to them which is not disclosed in a financial statement, but disclosure of which is necessary for a true and fair presentation of financial statements.

b) Failure to identify and assess the risk of material misstatement through the understanding of the entity and its environment.

Considering the proven professional misconduct and nature of violations and the principle of proportionality, NFRA has imposed the following penalties:

a) A monetary penalty of Rs 10,00,000 on the Engagement Partner (EP) and Rs 50,00,000 on the Firm.

b) Debarring CA from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.

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