New Delhi, Feb 3 (PTI) – The National Financial Reporting Authority (NFRA) has imposed a penalty of ₹5 lakh on Chartered Accountant Neeraj Bansal for serious lapses in the audit of Religare Finvest Ltd (RFL) for the financial year 2017-18. Additionally, the audit regulator has barred him from undertaking any audit work for the next five years.
Bansal, a member of the Institute of Chartered Accountants of India (ICAI), served as the engagement partner for RFL’s statutory audit during the said period. The NFRA's action follows an investigation initiated under the Companies Act, 2013, which led to the issuance of a show cause notice (SCN) to him in May 2024.
Key Findings of the NFRA Investigation
The NFRA's probe revealed multiple violations of auditing standards and regulatory requirements:- Failure to Report Fraud: Bansal did not comply with the Companies (Audit and Auditors) Rules, 2014, by failing to promptly report fraud concerning RFL’s corporate loan book (CLB) worth ₹2,036 crore to the central government, as mandated under the Companies Act, 2013.
- Negligence in Risk Assessment: The auditor did not adequately assess the risk of fraud or management override of controls, despite serious concerns raised by the Reserve Bank of India (RBI) regarding RFL’s CLB portfolio. RFL had also reported fraud linked to Strategic Credit Capital Pvt Ltd (SCCPL) to the RBI.
- Deferred Tax Asset Misrepresentation: The order highlighted that Bansal failed to verify the certainty of future taxable income against which deferred tax assets worth ₹495.63 crore were recognized in RFL’s books.
- Unjustified Investments: The NFRA found that Bansal did not question the business rationale behind RFL’s investment of ₹200 crore in non-convertible debentures of OSPL Infradel Pvt Ltd, a company with a net worth of just ₹1.23 lakh.
- Insufficient Audit Evidence: He also failed to obtain sufficient and appropriate audit evidence to verify the accuracy and completeness of consolidation adjustments related to RFL’s subsidiary, Religare Housing Development Finance Corporation (RHDFC).
Penalty and Audit Ban
As a consequence of these audit failures, the NFRA has not only imposed a ₹5 lakh fine on Neeraj Bansal but has also debarred him from conducting statutory audits, internal audits, or any financial statement reviews of companies or corporate entities for five years.This strict regulatory action underscores the NFRA’s commitment to enforcing high auditing standards and accountability in corporate financial reporting.
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