<p>New Delhi: The National Financial Reporting Authority (NFRA) has slapped penalties totalling Rs 8 lakh on two auditors and barred them for up to five years for professional misconduct in connection with the audit of DB Realty for FY16.</p>.<p>The order came after NFRA received information from Sebi in October 2022, regarding misstatements in the financial statement of DB Realty Ltd (now known as Valor Estate Ltd).</p>.<p>Thereafter, the regulator suo moto initiated an examination into the professional conduct of the statutory auditors of DB Realty Ltd (DBRL) under the Companies Act, 2013.</p>.<p>Separately, NFRA imposed a fine of Rs 5 lakh on Chetan Desai and Rs 3 lakh on Rakesh Rathi. Both were partners of the audit firm Haribhakti & Co LLP, which was the statutory auditor of DBRL for the financial year 2015-16.</p>.<p>ln addition, Desai and Rathi were debarred for a period of five years, and three years, respectively, from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate, NFRA said in a 32-page order on Monday.</p>.Economy recovering from Q2 slowdown: RBI bulletin.<p>The audit regulator found that Chetan Desai failed to exercise professional scepticism and judgement, perform appropriate audit procedures, and obtain sufficient appropriate audit evidence during an audit of Rs 3,894.43 crore of guarantees given and securities provided by DBRL to its related parties.</p>.<p>Further, Desai also failed to perform appropriate audit procedures, and obtain sufficient appropriate audit evidence during an audit of loans and advances of Rs 1,326.92 crore given by DBRL, out of which Rs 1,079 crore was given to related parties, many of which had negative net worth, NFRA said in the order.</p>.<p>NFRA noted that Chetan Desai did not involve himself in major audit procedures performed. His (Desai) involvement is limited to planning, review of financial statements and finalisation of audit reports without any involvement in such major areas as test of controls and substantive testing.</p>.<p>Hence, he failed to direct and supervise this audit engagement, the regulator said.</p>.<p>The regulator's examination also revealed that Rakesh Rathi failed to perform an appropriate review of significant judgments made by the engagement team, it added.</p>
<p>New Delhi: The National Financial Reporting Authority (NFRA) has slapped penalties totalling Rs 8 lakh on two auditors and barred them for up to five years for professional misconduct in connection with the audit of DB Realty for FY16.</p>.<p>The order came after NFRA received information from Sebi in October 2022, regarding misstatements in the financial statement of DB Realty Ltd (now known as Valor Estate Ltd).</p>.<p>Thereafter, the regulator suo moto initiated an examination into the professional conduct of the statutory auditors of DB Realty Ltd (DBRL) under the Companies Act, 2013.</p>.<p>Separately, NFRA imposed a fine of Rs 5 lakh on Chetan Desai and Rs 3 lakh on Rakesh Rathi. Both were partners of the audit firm Haribhakti & Co LLP, which was the statutory auditor of DBRL for the financial year 2015-16.</p>.<p>ln addition, Desai and Rathi were debarred for a period of five years, and three years, respectively, from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate, NFRA said in a 32-page order on Monday.</p>.Economy recovering from Q2 slowdown: RBI bulletin.<p>The audit regulator found that Chetan Desai failed to exercise professional scepticism and judgement, perform appropriate audit procedures, and obtain sufficient appropriate audit evidence during an audit of Rs 3,894.43 crore of guarantees given and securities provided by DBRL to its related parties.</p>.<p>Further, Desai also failed to perform appropriate audit procedures, and obtain sufficient appropriate audit evidence during an audit of loans and advances of Rs 1,326.92 crore given by DBRL, out of which Rs 1,079 crore was given to related parties, many of which had negative net worth, NFRA said in the order.</p>.<p>NFRA noted that Chetan Desai did not involve himself in major audit procedures performed. His (Desai) involvement is limited to planning, review of financial statements and finalisation of audit reports without any involvement in such major areas as test of controls and substantive testing.</p>.<p>Hence, he failed to direct and supervise this audit engagement, the regulator said.</p>.<p>The regulator's examination also revealed that Rakesh Rathi failed to perform an appropriate review of significant judgments made by the engagement team, it added.</p>