News around you

CA Rajiv Bengali barred from practice for professional misconduct

New Delhi: The National Financial Reporting Authority (NFRA) has debarred CA Rajiv Bengali for 5 years from being appointed as statutory auditor and internal auditor of any company or body corporate besides imposing penalty of Rs five lakhs, a statement from Ministry of Finance said on Monday.

The action has been taken for alleged professional misconduct for statutory audit of Trilogic Digital Media Limited (TDML) for the Financial Year 2016-17.
During investigation it was found that, Bengali had falsely reported the audit of Cash Flow Statement despite the fact that TDML’s Financial Statements did not include the Cash Flow Statement.
‘The auditor had also attempted to mislead NFRA with fabricated Cash Flow Statement. “He was grossly negligent in issuing unmodified audit opinion on financial statements which did not reflect a true and fair view of the state of affairs of the company,’ the statement said.
‘TDML had recognized Other Miscellaneous Expenditure of Rs 24.06 crores and had written off Rs 14.87 crores of Sundry Balances, which constituted 54.50% of total expenses of Rs 71.43 crores. Such expenses were 3041% higher than the previous year’s similar expenses of Rs 1.28 crores. Auditor had failed to exercise due diligence and maintain professional skepticism towards possibility of material misstatements due to fraud despite existence of such abnormal/unusual transactions,’ the statement said.
The auditor was allegedly negligent in evaluating the appropriateness of management’s assumption of ‘Going Concern’ despite existence of adverse indicators like revenue from operations decreased from Rs 51 crores to Rs 17.06 crores, TDML incurred loss of Rs 54.37 crores resulting in erosion of Networth from Rs 58.89 crores to Rs 4.52 crores and reduction in Inventory from Rs 12.71 crores to Nil etc.
‘TDML recognized Deferred Tax Assets (DTA) of Rs 11.96 crores without any certainty of sufficient future taxable income, against which such DTA can be realized. Auditor failed to report inappropriate recognition of DTA.
Auditor had violated a large number of Standards on Auditing; accordingly, audit of a listed company was performed in a perfunctory and casual manner. Auditor had failed to ensure compliance with six Accounting Standards,’ the statement said.
‘TDML did not give disclosure regarding details of transactions in Specified Bank Notes, a requirement mandated subsequent to Demonetization in November 2016. Similarly, TDML did not give complete disclosure regarding Related Party details and transactions. The auditor was grossly negligent in ensuring compliance with important disclosure requirements as per the Act. Auditor had falsely reported that TDML, a media and content syndication company, is registered as Non-Banking Finance Company under section 45 IA of the RBI Act 1934,’ the statement added. (UNI)

You might also like

Comments are closed.