ARJAVA MEDIA:
The National Financial Reporting Authority (NFRA) imposed a penalty of Rs 2 crore on Deloitte Haskins and punished two Chartered Accounts with fines and long-term debarring. ZEEL is a typical case of how promoters with majority shareholding rule the roost while taking the Board of Directors for a ride, sometimes without being on the board.
NFRA imposed a penalty of Rs 2 crore on Deloitte Haskins and Sells LLP and fined two Chartered Accounts for lapses in the Financial Year 2018-19 and 2019-20 audit of Zee Entertainment Enterprises (ZEEL). While Chartered Account A B Jani was fined Rs 10 lakh and barred from all types of auditing practice and being appointed as an auditor or internal auditor of any company for five years, Chartered Accountant Rakesh Sharma was fined Rs 5 lakh and barred from providing all types auditing services for three years. Jani worked at Deloitte Haskins as the Engagement Partner and Sharma as the Engagement Quality Control Review Partner.
NFRA discovered Deloitte’s failure to notice and report the irregularities in the Rs 200 crore fixed deposit ZEEL held in Yes Bank. The financial reporting regulator said: “Neither the creation and maintenance of fixed deposit nor its reappropriation by the bank was with the approval of the board or shareholders of the company. The statutory auditors failed to identify and report this misappropriation.” ZEEL used this fixed deposit as a guarantee against Yes Bank’s loan to Essel Green Mobility Ltd, a ZEEL group company. In July 2019, the bank liquidated the fixed deposit as a settlement of loan dues of seven promoter group companies.
The auditors are often forced to do professional misconduct to maintain long-term relationships with companies and entrepreneurs, of whom they have been auditors ‘for a long time’ in some ways. They must be aware of their duty and the necessity of honesty, showing boldness to refuse the way companies and entrepreneurs want the firms to be audited. Irregularities in the audit attributed to cheating of government and shareholders.
