The National Financial Reporting Authority (NFRA) has imposed a fine and a one-year ban on four auditors for alleged professional misconduct in connection with the audit of branches of Dewan Housing Finance Corp Ltd (DHFL) in 2017-18.
DHFL (now known as Piramal Capital and Housing Finance Ltd) is a listed entity, owned and controlled by the Piramal group.
In four separate orders, NFRA levied a fine of Rs 1 lakh each on auditors — Mathew Samuel, Sam Varghese, Harish Kumar T.K. and M. Baskaran. The auditors are partners of audit firm K. Varghese & Company.
Besides, all of them were restrained for a period of 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 during the ban period, the order said.
“The investigation by NFRA revealed prima facie evidence that the branchauditors had violated both the Companies Act, 2013and the Chartered Accountants Act, 1949 by accepting the appointment that lacked a valid approval and had also violated the SAs while carrying out the branch audit,” NFRA said.
Following allegations of misappropriation of approximately Rs 31,000 crore of public funds, the Enforcement Directorate reported an operation in April 2020 against alleged bank fraud of about Rs 3,700 crore by the promoters/directors of DHFL.
Thereafter, NFRA had suo-motu initiated an Audit Quality Review (AQR) conducted by Chaturvedi & Shah (CAS) firm to probe into the role of the Statutory Auditors of DHFL for the FY 2017-18.
During the review, NFRA noticed that 33 engagement partners or branch auditors had signed the “independent branch auditors’ report” for nearly 250 branches of DHFL.
