NFRA Investigation Unveils Auditor Misconduct | Non-Compliance, Negligence & Serious Lapses in Professional Conduct
- Blog|News|Account & Audit|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 28 August, 2023
Latest from Taxmann
The National Financial Reporting Authority (NFRA) on receiving the information from the Securities and Exchange Board of India (SEBI) initiated an investigation against the member of ICAI serving as Engagement Partner (EP) in the statutory audit of the company. The NFRA held the auditor guilty of professional misconduct for non-compliance with SA 570, Going Concern, SA 200, Overall objectives of Independent Auditor, Ind AS 109, Financial Instruments. A Show Cause Notice was issued against the EP, where several charges were leveled against him. The EP was given a reasonable opportunity of being heard. After analyzing the replies of EP, the NFRA held the auditor guilty of professional misconduct on the following grounds:
i. The EP failed to report the non-recognition of interest expense in respect of loans classified as NPA by lenders resulting in an understatement of interest cost, current liabilities, and understatement of loss incurred by the company.
ii. The EP failed to report the non-provisioning of liability arising out of the Income Tax order and disclosure of contingent liability in the financial statements.
iii. Despite reporting a consistent loss, having negative net worth and negative working capital, the EP failed to test the appropriateness of the use of going concern basis of accounting in the preparation of financial statements.
To know the detailed description of charges leveled against the auditor, his contentions, NFRA conclusion on the same, and penalty imposed on EP.
Click Here To Read The Full Story
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
CA | CS | CMA
