NEW DELHI: The National Financial Reporting Authority (NFRA) has said that Deloitte Haskins and Sells LLP failed to comply with auditing standards in carrying out statutory audit of IL&FS Financial Services and did not question the management over-inflating profit by over Rs 180 crore.
This is the first audit quality report of NFRA since its formation on October 1, 2018. The NFRA was set up as a regulatory body for framing and enforcement of legislation relating to accounting and auditing.
“The NFRA has concluded in this AQR report that the failure to comply with the standards on auditing are of such significance that (Deloitte Haskins and Sells)DHS did not have adequate justification for issuing the audit report asserting that the audit was conducted in accordance with the standards on auditing. Besides, the quality control system and processes of DHS were found to be severely inadequate and ineffective,” the release said.
The audit regulator is now examining whether disciplinary proceedings under the relevant provisions of the Companies Act 2013 need to be initiated against Deloitte or not.
The quality review was conducted as per the Section 132 (2)(b) of the Companies Act, 2013 and NFRA Rules, 2018, which require the NFRA to monitor and enforce the compliance with accounting standards and auditing standards in the country.
The crisis at diversified IL&FS group, which had also sparked off concerns in the overall financial system, came to light late last year.