NFRA imposes penalty on auditors of Coffee Day Enterprises arm
New Delhi: The National Financial Reporting Authority (NFRA) has imposed hefty penalty on the auditors of Tanglin Developments Ltd. (TDL), a group company of Coffee Day Enterprises Ltd. for alleged lapses in the audit of FY20 as part of a series of investigations into alleged financial irregularities in the group, showed an official order.
NFRA imposed a monetary penalty of ₹one crore on audit firm Sundaresha & Associates and debarred it for four years from being appointed as an auditor or internal auditor of any company, showed the order posted on the regulator's website. The audit firm, however, has challenged the show cause notice issued by NFRA before courts. "The auditors have questioned the legality of the show cause notice and the investigations done by NFRA.
The auditors are before various courts...and since the matter is sub judice, this order does not deal with them," NFRA said about the issues raised in the auditor's petitions before courts. NFRA also acknowledged that the auditor had provided a 'disclaimer of opinion' in the audit report because of the significance of certain matters flagged in the audit report, on financial statements and internal financial control over financial reporting. An auditor's disclaimer is used when the auditor is unable to form an opinion on the overall financial statements.
It indicates that the auditor does not express any opinion about the accuracy or fairness of the financial statements. NFRA also said that the audit firm was unable to comment whether books of accounts as required by the law have been kept by the company and whether the Financial Statements complied with the accounting standards, because of the matters flagged by the auditor in the audit report. NFRA alleged
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