NFRA has the powers to penalise CAs for misconduct, says tribunal

IF NFRA STARTS PROBING ANY CASE, NO INSTITUTION HAS THE POWER TO CONTINUE OR INITIATE ANY PARALLEL PROCEEDING, THE TRIBUNAL SAID

- Utkarsh Anand

The National Financial Reporting Authority (NFRA) has superior and overriding powers over the Institute of Chartered Accountants of India (ICAI) in matters relating to professional misconduct of chartered accountants (CAS), the National Company Law Appellate Tribunal (NCLAT) has ruled in a judgment while affirming the punishment imposed on four auditors, who conducted the audit of the 17 branches of the scam-hit Dewan Housing Finance Limited (DHFL) between 2014 and 2018.

The four auditors, who are practising chartered accountants s and worked for the firm K Varghese & Co that was assigned the audit work of DHFL branches, were saddled with a penalty of 21 lakh each, besides debarment for one year from being appointed as auditors or from undertaking any audit in respect of any company or body corporate, by the NFRA earlier this year.

Underlining that it was the first case on professional misconduct by auditors before the NCLAT, the tribunal bench led by justice Rakesh Kumar Jain declared that an errant chartered accountant cannot question the jurisdiction of the NFRA on the grounds that only the ICAI is authorised to take disciplinary action against her.