NFRA issues fresh orders against DHFL auditors

In fresh action against the auditors of erstwhile Dewan Housing Finance Corporation Ltd, the National Financial Reporting Authority (NFRA) has imposed monetary penalty of Rs 5 lakh each and debarred two statutory auditors for periods ranging from five years to 10 years.

In a recent order, the NFRA disposed off the show-cause notice issued to CA Amit Vinay Chaturvedi, partner of Chaturvedi and Shah LLP, who was the engagement quality control review partner for all the statutory audit of DHFL for 2017-18, and debarred him as an auditor, internal auditor or from undertaking any audit work for a period of five years and imposed a fine of Rs 5 lakh.

Based on an investigation, the NFRA found him guilty of professional misconduct and failed to meet relevant requirements of auditing standards.

In another similar order, the NFRA disposed off the show cause notice to CA Jignesh Mehta, partner of Chaturvedi and Shah, who was the engagement partner for the statutory audit of DHFL for 2017-18, and has imposed a fine of Rs 5 lakh and has debarred him for a period of 10 years.

In its order, the NFRA found the EP guilty of professional misconduct and noted that he failed to discharge his statutory duty of completing the branch audits, which was the key requirement of the Companies Act, 2013 in the completion of the audit of the company’s financial statements of 2017-18.

The NFRA, which was set up in 2018, is the statutory body to monitor the implementation and enforce compliance of the auditing and accounting standards and to oversee the quality of service of the professions associated with ensuring compliance with such standards. NFRA has the powers of a civil court.  

Following media reports on the alleged siphoning of public money of around Rs 31,000 crore by the directors of DHFL, the NFRA initiated an audit quality review of the statutory audit of DHFL carried out in 2017-18 by Shah and Chaturvedi.   

In the past also, the NFRA has issued a number of orders against auditors of DHFL who undertook branch audits and other audit work.

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