The National Financial Reporting Authority (NFRA) has imposed a fine of Rs 5 lakh on an auditor for lapses in the auditing of Religare Finvest Ltd for 2017-18.
The auditor (Neeraj Bansal) was also barred by NFRA from taking any audit work for five years, the audit regulator said.
Chartered Accountant Neeraj Bansal is a member of the Institute of Chartered Accountants of India (ICAI) and was the engagement partner for the statutory audit of Religare Finvest Ltd (RFL) for FY 2017-18, the order said.
The order came after NFRA initiated action under the Companies Act, 2013, for investigating into professional or other misconduct of the engagement partner for the statutory audit of RFL for the FY 2017-18 and issued a show cause notice (SCN) to Bansal in May 2024.
The regulator found that the auditor failed to comply with companies (audit and auditors) rules, 2014, in timely reporting of fraud to the central government under the Companies Act, 2013, in respect of the corporate loan book (CLB) of Rs 2,036 crore.
Further, NFRA observed that the auditor failed to appropriately assess the risk of fraud and risk of management override of controls in RFL, ignoring that the RBI had raised serious concerns regarding the CLB portfolio of the company and RFL itself reporting to RBI regarding fraud pertaining to strategic credit capital Pvt Ltd (SCCPL).
“Failure in verifying the certainty of future taxable income against which the deferred tax assets of Rs 495.63 crore were recognised in the books.
“The EP (Neeraj Bansal) failed to question the business rationale of the investments by RFL of Rs 200 crore in non-convertible debentures of OSPL Infradel Pvt Ltd (OSPL), which had a net worth of only Rs 1.23 lakh,” NFRA said in the order on January 30.
The auditor also failed to obtain sufficient appropriate audit evidence regarding the appropriateness, completeness and accuracy of consolidation adjustments and reclassifications relating to the accounts of RFL’s subsidiary- Religare Housing Development Finance Corporation (RHDFC).
Accordingly, NFRA penalised Neeraj Bansal and also debarred him for five years from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate, the order said.
