Audit Firm Penalized Rs. 500,000 for Professional Misconduct and Breaching Financial Reporting Standards.

Professional Misconduct by CA - Liability of the Engagement Partner (EP) with Audit Firm - The NFRA refuted the firm’s claims that only the EP was accountable, emphasizing that the firm itself must ensure adherence to auditing standards and maintain quality control systems. The firm’s failure to ensure compliance, oversee proper audit procedures, and maintain adequate documentation was highlighted as significant lapses. The authority found that the firm committed multiple breaches of professional duties including failing to disclose material facts, not reporting material misstatements, and gross negligence in conduct, all of which amounted to professional misconduct. NFRA imposed a monetary penalty of ₹500,000 on the firm, citing the need for strict adherence to professional standards to maintain the integrity and reliability of financial reporting. .....

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