The audit agency, which is a KPMG community affiliate, and the companions have been held responsible of “professional misconduct” by NFRA, the regulator for auditors and corporations coping with listed and enormous corporations. “BSR & Associates is disappointed with this order for the CDEL audit for the year ended March 31, 2019. The firm is currently assessing next steps and cannot comment further at this stage. BSR remains committed to the highest standards of professionalism, quality and integrity,” the agency stated in a press release.
When contacted, Maiya stated: (*2*)
In 2022, NFRA began its scrutiny primarily based on info from Sebi about its probe relating to diversion of Rs 3,535 crore from seven subsidiary corporations of Coffee Day Enterprises to Mysore Amalgamated Coffee Estate (MACEL), a promoter managed by the promoters. NFRA concluded that for FY19, the auditors “failed to report fraudulent diversion of funds to related parties and failed to exercise due diligence in performance of audit”.
The order pointed to a number of lapses. “The auditors did not report fraudulent diversion of funds, despite having enough evidence that public money was moved to a promoters’ entity, which had no business connection with the listed company. The auditors put on their blinkers and when asked to explain sought refuge in the provision of SA 600, relying on the work of auditors of the subsidiaries, while CDELs investments in these subsidiaries constituted a staggering figure of Rs 1,937 crore constituting 89% of the standalone balance sheet… Providing of loans by the listed company to a related party in the garb of an advance for purchases, the amount itself being over five times the value of purchases, was not questioned by the auditor for its business rationale.”
