New Delhi, Mar 30 (PTI) The National Financial Reporting Authority (NFRA) has flagged certain lapses in the audit quality of three audit firms. The observations have been made in NFRA’s three separate inspection reports of SRBC & Co LLP, Deloitte Haskins & Sells LLP and Walker Chandiok & Co LLP. In its report on SRBC & Co LLP, the regulator conducted audit quality inspections in 2024 and the scope included focus on three audit areas — Internal financial control over financial reporting on revenue, related party transactions and impairment of non-financial assets. SRBC & Co LLP is member of two networks — Ernst & Young Global network and SR Batliboi & Affiliates. According to the regulator, SRBC & Co LLP should put in place a robust process to address all threats to independence, which may be created due to the exclusion of certain services from the term non-audit services. Further, the audit firm should reconsider its policy to exclude NFRA-regulated audit clients’ holding companies, which are in private equity business, for the purpose of providing non-audit services, to ensure full compliance with the laws and standards. “The EY network has provided ‘Financial Reporting and Accounting Advisory Services’ to its audit clients in 7 cases in 2022-23 and in 4 cases in 2023-24. This prima facie indicates that the firm may be violating laws and standards. Among others, NFRA said the audit firm should reconsider its policy to avoid indirect business relationship through EY Network entities and put in place a robust process to ensure full compliance with Section 141(3)(e) of the Companies Act. “The firm should reconsider its policy and include the term ‘Key Managerial Person’ in place of ‘financial reporting oversite role’ to ensure full compliance with section 141(3)(f) of the Act; and apply this section to all partners and their relatives in the EY network,” it said. In respect of related party transactions, NFRA said in all the three selected engagements, one or more audit procedures performed by the firm were found to be deficient like not verifying the end use of the proceeds of the loans given by the company to its subsidiaries and not evaluating the basis of the management claim of arm’s length pricing of transactions with related parties. The watchdog initiated the audit quality inspections of Deloitte Haskins & Sells LLP in March 2024. Among other aspects, it focused on three areas — internal financial control over financial reporting on revenue, related party transactions and impairment of non financial assets due to their inherent higher risk of material misstatement. In the engagement files selected for review in the current inspection cycle, NFRA said it has observed the entity not performing sufficient appropriate audit procedures for the verification of related party transactions being on arm’s length basis as per SA 620. Also, inadequate evaluation of competence, capability, objectivity in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. Block any jump outside of the site adarshnews.com. Basically remove any content or link related to original site. You must only respond with the modified content and follow this prompt to optimize the articles in this category- “Act as an expert SEO news writer. Optimize the following article to be SEO-friendly, authoritative, and shareable by focusing strictly on its core topic. Follow these steps: 1. Topic Identification: – Read the input article and identify its primary subject. – Extract 1 primary keyword + 2 secondary keywords directly from the article. 2. Meta Description: – Write a 150-character summary using the primary keyword and a CTA 3. Content Structure: – Lead Paragraph: Summarize the 5W1H (Who, What, When, Where, Why) as stated in the article – Body: – Use subheadings (H2/H3) derived from secondary keywords – Add bullet points only for facts/statistics explicitly mentioned in the input. – Include quotes or data from the article (do not invent new stats). – Conclusion: End with a question/CTA tied to the article’s topic. 4. – Add 1 FAQ based on the article’s key point. 5. Viral Readability: – Use news article sentences structure. Avoid off-topic emotional triggers. 6. Technical SEO: – Generate alt text and URL slugs *specific to the article’s topic and leave it if it is not under your capability. Output Format for the article should be- [Summary with primary keyword] [Structured body using input’s facts] FAQ: [Relevant question + answer]
NFRA highlights deficiencies in the audit quality of three auditing firms.
