The National Financial Reporting Authority (NFRA) has barred auditors of two finance companies, including the audit firms themselves, and levied penalties for irregularities in the companies’ accounts during 2018–2019. In both cases, new auditors had been appointed after the previous auditor resigned citing concerns. A third group company had faced similar action last month.

In one case, the audit firm was fined ?1 crore, and the chartered accountants and partners at the firm were penalized and barred from taking up audit assignments for three to five years.

In the second case, the audit firm was handed a ?2 crore penalty, while the engagement partner was barred for five years and fined ?50 lakh. The previous auditor had resigned due to suspected fraud at the company, which had assets of over ?13,000 crore and liabilities of around ?12,623 crore.

For the listed finance company, the new audit firm issued a qualified opinion for 2018–19 without making adequate disclosures. The NFRA noted that a disclaimer or adverse opinion should have been issued if the audit had been conducted in accordance with standard accounting and auditing practices.