NFRA prohibits and fines Dewan Housing Finance Corporation Ltd. branch auditors, imposing a penalty on them for failing to undertake mandatory audits.
The National Financial Reporting Authority issued four orders against four partners of a firm namedly, M Baskaran, Harish Kumar T K, CA Sam Varghese and CA Mathew Samuel.
These orders are related to their role as engagement partners for the statutory audit of different branches of a housing finance company that no longer exists.
The NFRA fined each of them Rs 1 lakh and barred them from being appointed as an auditor, internal auditor, or undertaking any audit related to financial statements or internal audit of any company for one year.
The partners were not only fine but also prevented from auditing financial statements or doing internal audits of any company for one year. The orders showed that the auditors were accused of not taking responsibility, which led to professional misconduct, in addition to audit deficiencies.
The NFRA found out about the mistakes when they noticed that there was financial fraud in DHFL. They then reviewed the audit done by a chartered accountant firm called Chaturvedi & Shah for the housing finance company’s financial year 2018.
During the review, the NFRA noticed that 33 branch auditors had signed the “Independent Branch Auditors’ Report” for around 250 branches. However, none of the 33 branch auditors were approved at DHFL’s Annual General Meeting, which is required by the Companies Act.
The audit deficiencies were also found in the period before the Piramal Group acquired the non-bank lender as part of a debt resolution plan.
In January 2021, 94% of the creditors of DHFL approved a resolution plan by the Piramal Group, and the deal was approved by the RBI, the Competition Commission of India, and the National Company Law Tribunal.
In 2020, there were accusations that a housing finance company called DHFL took about Rs 31,000 crore of public money as a result of which NFRA prohibits and fines Dewan Housing Finance Corporation Ltd. branch auditors this week.
The Enforcement Directorate took action and said that the company’s promoters or directors have been involved in a banking fraud of about Rs 3,700 crore. As a result, the company went bankrupt and Piramal Capital and Housing Finance bought it.
NFRA is a group that checks if people are following the rules when it comes to accounting and auditing. They make sure that people who work in these professions are doing a good job.
Source: NFRA
