The National Financial Reporting Authority (NFRA) has imposed a penalty of Rs 1 lakh and a one-year ban on an auditor for professional misconduct in the audit of SRS Ltd in 2017-18. In its order, the audit regulator slapped a fine of Rs 1 lakh on Apoorve Bansal of SVP & Associates, who was the Engagement Quality Control (EQC) reviewer for the statutory audit of SRS Ltd.
Besides, Bansal was also debarred for one year from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate, the regulator said in an order on Tuesday.
The order came after NFRA received a letter from the Serious Fraud Investigation Office (SFIO), which had investigated the affairs of SRS Ltd and its group companies.
Thereafter, the regulator initiated action for professional or other misconduct against Apoorve Bansal, the EQC Reviewer in the statutory audit of SRS Ltd for FY2017-18.
SRS Ltd, one of the companies within the SRS Group dealing in the business of Jewellery, cinema, real estate, and financial services, was a listed company and therefore falls under the regulator’s domain. It went under the Corporate Insolvency Resolution Process (CIRP) by the order of the NCLT in August 2018.
In its investigation, NFRA found that the EQC Reviewer (Apoorve Bansal) failed to meet the relevant requirements of the standards on auditing (SA) and standard on quality control in several significant respects, reflecting a lack of professional competence to act as an EQC Reviewer for the audit of a public interest entity (PIE).
The regulator also found that Apoorve Bansal was negligent in several areas of audit and failed to apply professional skills and due diligence sufficiently and adequately to critically evaluate the work of the Engagement Partner (EP) and the Engagement Team (ET), the order said.
Further, Bansal, though a chartered accountant, was also not experienced enough to undertake the quality review and failed to assess the working papers related to important issues in the audit, such as evaluation of going concern basis, suspected fraud, and setting of materiality etc, NFRA said.
In April, NFRA imposed a fine of Rs 3 lakh each on two auditors — Pankaj Kumar and Naresh Kumar and prohibited them for three years for professional misconduct and other lapses in connection with the audit of SRS Ltd for FY2017-18.