NFRA finds lapses in audit of IL&FS Financial Services

The National Financial Reporting Authority (NFRA) has found several lapses in the statutory audit of IL&FS Financial Services Ltd for 2017-18 done by BSR & Associates LLP.

First of all, NFRA -- which comes under the Ministry of Corporate Affairs -- said the appointment of BSR as the statutory auditors of IFIN was illegal and void.

The instances of failure to comply with the requirements of standards of auditing by BSR are significant and BSR did not have adequate justification for issuing the audit report asserting that the audit was conducted in accordance with standards of auditing.

The failure to comply deals with material mis-statements of major magnitude and fundamental importance, going concern assumption by the management, the complete absence of the required communication with those charged with governance and determination of materiality amounts on the basis of non-relevant factors.

Further, said a statement issued by the Ministry of Corporate Affairs, NFRA found that the IT processes and platform used by BSR have deficiencies that are systemic and structural in nature.

Separately, said the statement, NFRA will examine whether disciplinary proceedings under Section 132(4) of the Compes Act 2013 need to be initiated in connection with the audit quality review report.

IFIN is part of IL&FS Group where financial irregularities came to light in late 2018 and the ministry had superseded the IL&FS board.

( With inputs from ANI )