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Delhi High Court grants interim relief to IL&FS audit partners from NFRA order


Mumbai: The Delhi High Court on Tuesday allowed partial relief to three Deloitte partners and said that no proceedings should be initiated by the audit regulator, NFRA, against them for now.

Three partners of Deloitte India, Udayan Sen, Shrenik Beid and Rukshad Daruvala, had filed a writ petition in the high court challenging the jurisdiction of NFRA.

NFRA is investigating the role of statutory auditor in the audit of fraud hit IL&FS Financial Services Ltd (IFIN).

Last month NFRA de-barred and slapped a penalty on the Deloitte executives for their alleged role in the IFIN audit lapses.

The partners had first filed a writ petition in the Delhi High Court after NFRA issued a show cause notice in January.

After the July order the partners had requested the court to let them include the final NFRA order issued in July.

The High Court has granted the permission for the same and has set August 20 as the next date of hearing.

The three Deloitte executives are challenging NFRA’s jurisdiction to de-bar them.

The NFRA order was against all the executives including Sen, a former CEO of Deloitte India, who was the main engagement partner for Deloitte Haskins and Sell, IFIN’s auditor.

“..Sen is debarred for the period of seven years from being appointed as an auditor or internal auditor or undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate,” NFRA said in the July order.

In the writ petition Sen said that NFRA wasn’t even formed when the audit of IFIN was conducted.

He goes on to argue that any penalty on him would be “retrospective” because a regulator and regulations formed afterwards doesn’t have jurisdiction over an event that occurred earlier.

NFRA on Monday also released a separate report on the audit of IFIN.

NFRA in the report observed that appointment of BSR & Associates, part of KPMG India network, as the auditor of IL&FS Financial Services Ltd (IFIN) was illegal and that the firm did not adhere to standards of auditing while scrutinising the accounts.


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