The National Financial Reporting Authority (NFRA) has made a significant move in its regulatory role by issuing the first-ever Audit Quality Review (AQR) report since its establishment on October 1, 2018. Focusing on the statutory audit for the fiscal year 2017-18 of IL&FS Financial Services Limited (IFIN), conducted by Deloitte Haskins and Sells LLP (DHS), the report sheds light on crucial findings.
The AQR, carried out in accordance with Section 132(2)(b) of the Companies Act, 2013, and NFRA Rules, 2018, aimed at monitoring and enforcing compliance with accounting and auditing standards in India. The NFRA’s verdict in the report is impactful, highlighting that the non-compliance with Standards on Auditing was so substantial that DHS lacked adequate justification for asserting the audit’s adherence to these standards. Furthermore, the report reveals severe inadequacies and ineffectiveness in the quality control system and processes of DHS.
In a subsequent development, NFRA has indicated its intent to explore disciplinary proceedings under Section 132(4) of the Companies Act, 2013. This move showcases NFRA’s commitment to ensuring robust adherence to auditing and accounting standards, reinforcing its role as a vital regulatory body in the financial reporting landscape.
