Big4 Auditor penalised by NFRA for lapses in Audit

The National Financial Reporting Authority (NFRA) has imposed a penalty worth Rs. 5 lakh on an auditor for professional misconduct and other errors in the audit of Sobha Ltd for the period 2017-18 and 2018-19.

On September 29, an order was passed referring to a fine of Rs 5 lakh imposed on Supreet Sachdev (partner of BSR and Co LLP) by a regulator.

The order was issued after the Securities and Exchange Board of India (SEBI) sent information to NFRA vide a letter dated May 2021 against Sachdev for professional misconduct in the statutory audit of Sobha for the two consecutive Financial Years 2017-18 and 2018-19.

Further, the regulator took action against Sachdev.

The auditor did not abide by the provisions of standards on auditing (SA) as he failed to report on the uncertainty about the recovery of unsecured land advances of Rs 1,843.13 crore, with unmarketable title to the land some of which also is under litigation, found by the NFRA in the investigation.

NFRA said in the order that the accused did not report even after identifying the weakness in the internal controls over the advances.

According to the order, he did not address non-provisioning against the amount outstanding from various individuals and the security deposits given to certain other individuals did not obtain acceptable appropriate audit proof in respect of these transactions, however, the auditor was aware that SEBI was investigating the transactions.

Moreover, Sachdev did not want to comment on the Auditor’s Report for FY19, on the issues raised by SEBI either through qualification or through emphasis on the matter. As a result, a monetary penalty of Rs.  5,00,000 is imposed on CA Supreet Sachdev

For the official order download the PDF given below: