NFRA penalises CA for not reporting ‘material misstatements’ in listed companies Financial Statements

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NFRA penalises CA for not reporting ‘material misstatements’ in listed companies Financial Statements

 

 

NFRA imposes a penalty of Rs. 1 lakh on a Chartered Accountant (‘Noticee’) for professional misconduct u/s 132(4) of the Companies Act pertaining to his performance as the statutory auditor of a listed company for FY 2019-20;

NFRA observed as under:

(i) the listed company was required to comply with the Indian Accounting Standards (Ind AS) for preparation and presentation of its annual financial statements under the Companies (Indian Accounting Standards) Rules.

(ii) Noticee issued an unmodified report on the financial statements of the company for FY 2019-20 having stated that the financial statements gave the requisite information required in the required manner.

However, the Financial Reporting Quality Review (FRQR) of the company conducted by NFRA indicated non-compliance with Ind AS reporting framework and applicable provisions of the Companies Act, 2013, resulting in significant misstatement of almost all figures and disclosures.

Some of the major violations observed by the NFRA, which were not reported by the CA were, non-provision of impairment losses by the company, thereby reporting inflated profits, non-preparation of consolidated financial statement despite the existence of a material associate co., etc

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