NFRA slaps Rs 10-cr penalty on BSR & Associates in Coffee Day case, debars two auditors
NFRA) has imposed a penalty of Rs 10 crore on KPMG affiliate M/s BSR & Associates LLP, the highest slapped by the regulator in any case, and debarred two of its auditors for alleged glaring professional lapses in the 2018-19 audit of Coffee Day Enterprises.
The order, issued on Monday, follows an investigation report by capital markets regulator Sebi about the alleged diversion of Rs 3,535 crore from seven subsidiaries of Coffee Day Enterprises to an entity owned by its promoters.
NFRA has now barred auditors Aravind Maiya and Amit Somani from taking up audit work for 10 years and five years, respectively. In addition, Maiya will have to pay a penalty of Rs 50 lakh and Somani Rs 25 lakh.
While Maiya, being the engagement partner, remained a key person in the 2018-19 Coffee Day audit, Somani was the engagement quality control reviewer, which required him to review the audit at appropriate stages.
The regulator has flagged “substantial deficiencies in audit, abdication of responsibility and the issuance of a false and misleading unmodified audit report”.
“The foregoing discussion in this order is replete with the instances of the lapses in audit, the infraction of the law and non-adherence to the standards of audit, Quality Control Standards and Code of Ethics by the auditors of a listed company (Coffee Day Enterprises Ltd, or CDEL),” said the order issued by NFRA chairman Ajay Bhushan Prasad Pandey and its two full-time members.
The auditors, the order stressed, did not report «fraudulent diversion of funds»,
