NFRA penalise 18 auditors: The National Financial Reporting Authority (NFRA) has levied penalties on 18 auditors and debarred them for varying durations due to deficiencies in audits conducted across multiple branches of the housing finance company DHFL.
The auditors are facing penalties amounting to a total of Rs 18 lakh, with each auditor fined Rs 1 lakh for professional misconduct, according to 18 separate orders issued by the regulatory body.
In addition to the monetary fines, the auditors have been debarred for a period ranging from six months to one year. During this debarment, they are prohibited from being appointed as an auditor, internal auditor, or conducting any audit related to financial statements or internal audit functions and activities of any company or body corporate.
Among the 18 auditors, four have been debarred for six months, while the remaining 14 auditors face a one-year restriction.
Misappropriation of public funds
The NFRA took action following media reports of alleged misappropriation of public funds amounting to approximately Rs 31,000 crore and the reported actions by the Enforcement Directorate in April 2020 regarding an alleged banking fraud of about Rs 3,700 crore by the promoter/directors of DHFL. In response, the regulator initiated an Audit Quality Review (AQR) on its own accord.
The AQR was conducted to investigate the role of Statutory Auditors of DHFL for the fiscal year 2017-18, the year in which the alleged fraud was primarily reported. The NFRA’s probe revealed violations by these auditors in their capacities as Engagement Partners (EPs) during the audit of DHFL branches.
The watchdog found that 33 EPs or branch auditors had signed the independent branch auditors’ reports for nearly 250 DHFL branches. However, none of these EP appointments were approved at the company’s annual general meeting during the Audit Quality Review.
