CA Debarred: NFRA debars CA Rajiv Bengali for five years and imposed penalty of Rs.5 Lakhs

The National Financial Reporting Authority (NFRA) has issued an order regarding professional misconduct by CA Rajiv Bengali of M/s Subramaniam Bengali & Associates, Engagement Partner for Statutory Audit of Trilogic Digital Media Limited (TDML) for the Financial Year 2016-17, in accordance with section 132(4) of the Companies Act 2013 (the Act).

Following are a few of the most significant mistakes made during the investigation of professional misconduct:

1. Despite the fact that the Cash Flow Statement was not included in TDML’s financial statements, the auditor had erroneously claimed that it had been audited. The Auditor had also made an effort to deceive NFRA by fabricating a Cash Flow Statement.

2. When the auditor issued an unaltered audit opinion on financial statements that did not accurately and fairly depict the company’s condition of affairs, this constituted grave negligence.

3. In spite of negative indicators like a drop in revenue from operations from Rs 51 crores to Rs 17.06 crores, TDML suffering a loss of Rs 54.37 crores, causing a decline in net worth from Rs 58.89 crores to Rs 4.52 crores, and a drop in inventory from Rs 12.71 crores to Nil, the auditor was negligent in evaluating the appropriateness of management’s assumption of the company being a “going concern.”

4. A total of Rs 71.43 crores in expenses, or 54.50% of all expenses, were recognised by TDML as Other Miscellaneous Expenditure of Rs 24.06 crores and written off as Sundry Balances of Rs 14.87 crores. These costs were 3041% greater than comparable costs from the previous year, which came to Rs 1.28 crores. Despite the existence of such abnormal/unusual transactions, the auditor failed to apply due diligence and retain professional scepticism towards the likelihood of substantial misstatements owing to fraud.

5. Deferred Tax Assets (DTA) of Rs. 11.96 crores were recognised by TDML even though there was no assurance that there would be enough future taxable income to offset them. The auditor neglected to note the improper recognition of DTA.

6. Due to the auditor’s numerous Standards on Auditing violations, the audit of a listed business was conducted in a hasty and careless manner.

7. Six Accounting Standards’ compliance was not verified by the auditor.

8. Following the Demonetization in November 2016, TDML was required to disclose specifics of transactions involving Specified Bank Notes. However, they did not comply with this requirement. Similar to this, TDML withheld certain information on Related Party details and transactions. In order to ensure compliance with crucial disclosure requirements set forth by the Act, the auditor acted with egregious negligence.

9. The auditor made a false claim regarding TDML’s registration as a non-banking finance business under section 45 IA of the RBI Act 1934. TDML is a media and content syndication company.

To Read Official Order Download PDF Given Below: