NFRA Imposes Rs 2 Cr Penalty On Deloitte For Alleged Zee Audit Irregularities: Report
Two chartered accounts—CA AB Jani and CA Rakesh Sharma—have also been fined Rs 10 lakh and Rs 5 lakh, say media reports
The National Financial Reporting Authority (NFRA) has reportedly imposed a Rs 2 crore penalty on Deloitte Haskins & Sells for audit lapses in Zee Entertainment Enterprises (Zeel) in the FY18-19 and FY19-20. Two chartered accounts—CA AB Jani and CA Rakesh Sharma—have also been fined Rs 10 lakh and Rs 5 lakh, say media reports.
Jani, who was the Engagement Partner (EP) has been barred for five years, and Sharma, who was the Engagement Quality Control Review (EQCR) has been barred for three years.
It is reported that in September 2018, Zeel Chairman and promoter of Essel Group of Companies committed Rs 200 crore fixed deposit to Yes Bank through a letter for loans guaranteed for Essel Green Mobility Ltd, according to NFRA.
Yes Bank reportedly appropriated the FD in July 2019 towards the settlement of loan amounts due from seven promoter group companies. The order said that the creation and maintenance of the FD, and its reappropriation were not carried out with approval from the company’s shareholders.
Alleging gross negligence, the regulator said that the auditors “failed to apply professional skepticism and due diligence.” It further added that they didn’t challenge the management’s assertions and did not evaluate reporting of suspected fraud, which was evident from the unauthorised guarantees, premature closure of FD and the unauthorised use of ZEEL’s funds for settling the loan of the promoter group companies, all with the chairman's and management’s knowledge.
