Mumbai: The National Financial Reporting Authority (NFRA) has imposed a penalty of Rs60 lakh on chartered accountant (CA) Devang Dalal and CA firm MH Dalal & Associates for professional misconduct.
Dalal was fined Rs10 lakh and debarred for five years from being appointed as an auditor of any company or body corporate. Additional penalty of Rs50 lakh was imposed upon his firm M/s MH Dalal & Associates.
Poor quality of audit, incomplete documentation
A tribunal bench observed that “the audit firm made departure from the Standards and the Companies Act, 2013 in the conduct of the audit of MAN Industries (India) Limited, Mumbai”. The poor quality of audit, incomplete documentation and attempt to mislead through evasive replies further compounds the professional misconduct on the part of the firm, the bench observed.
Dalal is a member of the Institute of Chartered Accountants of India (ICAI) and was the engagement partner for the statutory audit of MIIL for 2020-21 and did not obtain sufficient appropriate audit evidence in a number of material account balances and class of transactions.
Dalal failed to perform the fundamental duty to attend the physical count by the management of inventory and other related procedures making false statements in their report on the Internal Control over Financial Reporting, without testing their adequacy and operating effectiveness as required by the relevant guidance note of the ICAI.