In two separate orders, made public on Wednesday, the regulator has banned Jignesh Mehta for taking up audits for 10 years and Amit Vinay Chaturvedi for five years. A penalty of Rs 5 lakh has also been imposed on each of them. These are among the severest punishments, extended by the NFRA, to scores of DHFL auditors in various cases of misconduct.
Mehta acted as the engagement partner for the statutory audit of DHFL in FY18, while Chaturvedi took up the job of an engagement quality control review partner.
The fresh directives come within a week of the National Company Law Appellate Tribunal (NCLAT) upholding on December 1 the NFRA’s orders against four partners of Kerala-based firm K Varghese & Co for their FY18 audits of DHFL. It also ruled that the NFRA has power to probe cases of professional misconduct that had occurred before the watchdog was set up in 2018.
In its orders against Mehta and Chaturvedi, the NFRA alleged that they “failed to meet” relevant accounting standards and violated the law “in respect of several significant areas”. Both were found to be “grossly negligent” and they “failed to apply professional skepticism and due diligence sufficiently and adequately” while discharging their duties.
Scandal-hit DHFL was in 2021 acquired by the Piramal Group through a resolution plan under the Insolvency and Bankruptcy Code, which was endorsed by the National Company Law Tribunal.The NFRA said it suo-motu initiated an audit quality review to probe the role of the statutory auditors of DHFL for FY18 in the wake of media reports on the alleged siphoning of public money of around Rs 31,000 crore and the Enforcement Directorate’s reported action in April 2020 on an alleged banking fraud of about Rs 3,700 crore by the promoter/directors of DHFL.In October 2023, the NFRA had debarred 18 other auditors for up to a year and also imposed penalties on them, citing professional misconduct in the audits of various branches of the crisis-hit DHFL.
Among other lapses, the NFRA had found that 33 branch auditors had signed the so-called “Independent Branch Auditors’ Report” for nearly 250 branches but none of their appointments was approved at the company’s annual general meeting.
