Could NFRA Exercises Jurisdiction Beyond Seven Years From the Date of the Auditor’s Report?
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- Last Updated on 26 December, 2023
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Based on information received from Central Economic Intelligence Bureau (‘CEIB’ hereafter), Ministry of Finance, Government of India and other information subsequently collected from IDBI Bank, NFRA noticed multiple lapses and irregularities. After conducting preliminary examination, NFRA suo-motu initiated investigations into the professional conduct of the statutory auditors of the company under Section 132(4) of the Companies Act 2013.
(a) Acting as statutory auditor of the company while holding or controlling shares of the company in violation of section 141 of the Companies Act 2013 & section 226(3)(e) of the Companies Act 1956 resulting in failure to maintain independence of auditor
(b) Non-compliance with para 7 to 9 of Standard on Auditing (SA) 705 “Modifications to the Opinion in the Independent Auditor’s Report” while expressing opinion in Independent Auditor’s Report dated 06.10.2015 – Standalone Financial Statements (SFS) and Independent Auditor’s Report dated 15.10.2015 – Consolidated Financial Statements (CFS)
This order of NFRA also deals with the issue of time limitation of issue of letter for investigation by NFRA within a period of seven years from the date of the auditor’s report. SA 230 and SQC 1 states that retention period for audit engagements ordinarily is no shorter than seven years, or, if later, the date of the group auditor’s report. This story deals with issue whether NFRA can exercises jurisdiction beyond seven years from the date of the auditor’s report.
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