NFRA Brought Clarity on Its Jurisdiction & Lapses in EQCR Partner Workings in Its Order

NFRA in its order dated 05.12.2023 emphasized the duty of an EQCR partner to conduct the review of the work of the Engagement Team and ensure that the proper working documentation has been kept for review engagement. As per NFRA, without a credible audit, the entire corporate governance system would fail and result in a breakdown in the trust and confidence of investors and the public at large if the auditors and EQCR partner do not perform their job with professional scepticism and due diligence and adhere to the standards.

a) Failure to maintain appropriate documentation by EQCR partner

b) Objective evaluation of the significant judgements made by the Engagement Team(ET)

c) Relying on the work of illegally appointed branch auditors

d) Failure to report material misstatements in the CFS

e) Failure to examine non-compliance with NHB Directions

f) Failure to notice that EP failed to obtain sufficient information for issuing opinion in ICFR u/s 143(3)(i) to verify Internal Financial Controls

g) Failure of EP to assess the risk of material misstatements not noticed/pointed out by EQCR

h) Failure by EQCR to review evaluation of the going concern assumption by EP

i) Failure by EQCR partner to notice that EP failed to verify RPTs

EQC Reviewer was held guilty of professional and other misconduct in terms of his statutory obligation and imposes a monetary penalty of Rs. 5,00,000/- (Rupees Five Lakh) upon EQC Reviewer and debarment of 5 years (Five years) 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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