Deloitte: India
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YEAR-WISE DEVELOPMENTS
2020
Former CEO gets 7-year audit work ban
Deloitte’s former CEO gets 7-year audit work ban, July 23, 2020: The Times of India
From: Deloitte’s former CEO gets 7-year audit work ban, July 23, 2020: The Times of India
Held Guilty Of Misconduct While Auditing IL&FS Fin Services A/cs
New Delhi:
National Financial Reporting Authority (NFRA), the regulatory body for auditors of listed and large companies, on Wednesday announced a seven-year ban on former Deloitte CEO Udayan Sen from undertaking any audit work, holding him guilty of “professional misconduct” in audit of the accounts of IL&FS Financial Services (IFIN).
Sen, who was the engagement partner, also faces a penalty of Rs 25 lakh for the irregularities. IFIN is part of beleaguered IL&FS group, where massive financial irregularities came to light in late 2018, prompting the government to supersede the management and order investigations.
The execution of the order, however, depends on a case in the Delhi high court, where Sen has challenged NFRA’s jurisdiction, with the case slated to be heard on July 31.
“As a professional accounting firm we are surprised and concerned that the NFRA has chosen to issue and make public an order against a former partner of the firm, in spite of the question of its jurisdiction being sub-judice and awaiting adjudication and disposal by the hon’ble Delhi high court,” Deloitte India said.
In its 88-page order, the agency relied on provisions of the Companies Act to hold Sen guilty. NFRA chairman R Sridharan and member Prasenjit Mukherjee noted that there was a “serious lapse” in discharge of duty by Sen, who is a chartered accountant.
“In this case, it has been clearly shown that the independence in mind and independence in appearance of the statutory auditor had been totally compromised,” the order said.
The watchdog found him guilty of professional misconduct during the entire process and also said there was intentional reckless behaviour by Sen.
“Professional misconduct becomes very serious when the chartered accountant has gone along with the management of the company in agreeing to misstatements/omissions so as to commit a fraud on the users of the financial statements,” the NFRA order said.
It also said that there was deliberate mis-statement as the company had ceased to comply with the stipulated norms related to net-owned funds and capital adequacy ratio. “Chartered accountant Udayan Sen went along with this attempt at fraudulent presentation of the financial statements. Hence, this would necessitate the imposition of severe penalty,” the agency further observed.
2024/ NFRA fines Deloitte Haskins & Sells, two CAs Rs 2 crore in Zee case
Dec 26, 2024: The Times of India
New Delhi : The National Financial Reporting Authority (NFRA) has imposed a fine of Rs 2 crore on Deloitte Haskins & Sells as well as penalties on two chartered accountants for lapses in the auditing of Zee Entertainment Enterprises during the 2018-19 and 2019-20 financial years.
Along with slapping a fine of Rs 10 lakh, A B Jani has been barred from taking up any audit work for 5 years, while the fine is Rs 5 lakh on Rakesh Sharma, and the debarment period is 3 years. Jani was the engagement partner (EP), and Sharma was the engagement quality control review (EQCR) partner for the audit of the company for 2018-19 and 2019-20. The regulator had suo motu examined the audit file for the statutory audit of Zee Entertainment Enterprises for the given periods to assess whether the auditor committed any professional misconduct.
After examining the audit file and responses of the audit firm to its queries as well as other records, NFRA said prima facie auditors had not discharged their professional duties under the Companies Act as well as the standards on auditing (SA). In its 30-page order dated Dec 23, NFRA said auditors failed to meet the relevant requirements of the SAs and violated the Act in respect of certain significant related party transactions. The watchdog has imposed a monetary penalty of Rs 2 crore on Deloitte Haskins, apart from penalties on Jani and Sharma. Both individuals have been debarred 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,” for varying periods.
A Deloitte spokesperson said it has received the NFRA order against the firm and two retired partners. AGENCIES
