Three, including Deloitte, fined Rs 2 crore in ‘G’ case; Authority orders 30 pages

New Delhi| The National Financial Reporting Authority (NFRA) has fined Deloitte Haskins & Sales Rs 2 crore for lapses in the audit of Zee Entertainment Enterprises Limited (ZEEL) during FY 2018-19 and FY 2019-20. Apart from this, fine has also been imposed on two chartered accountants.

NFRA has imposed a fine of Rs 10 lakh on CA AB Jani and barred him from being appointed as auditor or internal auditor for five years or from conducting any audit in respect of financial statements or internal audit of functions and activities of any company or corporate.

The regulator has banned CA Rakesh Sharma for three years from being appointed auditor besides imposing a fine of Rs 5 lakh on him. Jani was the Engagement Partner (EP) and Sharma was the Engagement Quality Control Review (EQCR) for the audit of ZEEL for the period FY 2019 to FY 2020. The authority has given this decision in a 30-page order.

In September 2018, the president of GEEL, who is also the promoter of Essel Group of Companies, issued a letter to Yes Bank, NFRA said in a 30-page order. GEEL’s fixed deposit of Rs 200 crore was used as a guarantee for loans granted by Yes Bank to Essel Green Mobility Limited, a company of Promoter Group.

The bank had adjusted fixed deposits (FDs) in July 2019 to settle outstanding loan amounts from seven promoter group companies. The order states that the construction and maintenance of the FD and its adjustment by the bank were not approved by the company’s board or shareholders. The order said that the statutory auditors failed to identify and report this misrepresentation.

“Our investigation revealed that the auditors were grossly negligent”, the regulator said. They failed to exercise due diligence. They did not adequately challenge management claims and failed to evaluate the reporting of suspected fraud”