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The Tax Publishers 2022 TaxPub(CL) 2868 (NFRA) COMPANIES ACT, 2013
Section 132
Company did not comply with AS reporting framework in preparation and presentation of financial statements, but statutory auditor did not report any of such non-compliances and issued a false audit report, professional misconduct committed by the auditor was proved by evidences, penalty and debarment of one year was imposed upon the auditor.
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Constitution of National Financial Reporting Authority - Issuance of show cause notice to statutory auditor regarding professional misconduct - Non-compliances of AS reporting by company in preparation of financial statements - Issuance of false audit report by auditor proved by evidences
NFRA found that company (PSIL) had not complied with AS reporting framework and applicable provisions of the Companies Act, 2013 in the preparation and presentation of its financial statements. Further, statutory auditor of company in his audit report did not report any of non-compliances with applicable financial reporting framework and failed to consider laws and regulations during the audit, resulting in issuing a false audit report and thus committing professional misconduct. Therefore, NFRA issued a show cause notice under section 132(4) to the auditor regarding professional misconduct. Held: The auditor accepted his default and submitted that he did not know about the Ind-AS requirements as he was a small-town practitioner. Further, the mistakes that happened were not intentional and there was no intention of fraud. All the charges of professional misconduct in the SCN stand proved based on the evidence in the Audit File, the Audit Report issued by the auditor, submissions made by the auditor and the company, annual report of the company and report published by NFRA. Thus, penalty was imposed upon the auditor and he was also debarred for one year from being appointed as an auditor or internal auditor or undertaking any audit in respect of financial statements.
REFERRED :
FAVOUR : Against the noticee
A.Y. :
IN THE NATIONAL FINANCIAL REPORTING AUTHORITY
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