Ministry of Corporate Affairs begins Proceedings to Prohibit 9 Auditors & Audit Partners

Highlights:

  1. The Ministry of Corporate Affairs (MCA) has handed over the authority to its regional unit to begin the proceedings against 9 auditors and audit partners
  2. Charges against DHS, BSR, Udayan Sen, Sampath Ganesh, Rakesh Jain, Kalpesh Mehta, Nishit Udani, Shrenik Baid, Payal Rathod, Anju Rawat, AP Shah and AP Shah Associates
  3. The Regional Director was informed to look into the attachment of their movable and immovable assets that include “Lockers, bank accounts and jointly held properties.”

The Ministry of Corporate Affairs (MCA) has handed over the authority to its regional unit to begin the proceedings against 9 auditors and audit partners that include BSR Co. and Deloitte Haskins & Sells (DHS) to bar them, as they were charged with conspiring with the IL&FS Financial Services management for scamming its book of accounts.

The Regional Director has been authorized to begin the bar proceedings under section 140 (5) of the Companies Act against DHS, BSR, Udayan Sen, Sampath Ganesh, Rakesh Jain, Kalpesh Mehta, Nishit Udani, Shrenik Baid, Payal Rathod, Anju Rawat, AP Shah and AP Shah Associates “For their role in perpetuating the fraud and seek debarment,” the Ministry said.

The Regional Director was informed to tag the auditors in the proceedings under section 241 and 242 of the Companies Act before the NCLT and look into the attachment of their movable and immovable assets that include “Lockers, bank accounts and jointly held properties.”

The Serious Fraud Investing Office (SFIO), that filed charges against the auditors in the investigation into IL&FS has been asked to start disciplinary proceedings against them before the Institute of Chartered Accountants of India (ICAI) and the National Financial Reporting Authority (NFRA).

30 Individuals and entities were charged by the SFIO with fraud, under section 447 of the Companies Act and sections relating to cheating under the Indian Penal Code, that also include statutory auditors and audit partners.

The SFIO alleged that the auditors “connived, colluded with the coterie” to hide material information, scamming the books of accounts and financial statements from FY 2013-14 to FY 2017-18. SFIO said they “ knowingly did not report the true state of affairs of the company”, specifically the negative net owned funds and the negative capital to risk asset ratio, that turned out as losses for the people who invested in its non-convertible debentures.

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  1. Ministry of Corporate Affairs begins work to bar 9 auditors, audit partners
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