The National Financial Reporting Authority (NFRA) has barred Aravind Maiya, former partner at BSR & Co and current CEO of Embassy REIT, from practicing as an auditor for 10 years. Additionally, Maiya has been fined Rs 50 lakh. The NFRA also imposed a hefty Rs 10 crore penalty on BSR & Co, an affiliate of KPMG, in connection with the fraudulent activities at Cafe Coffee Day (CCD).
The NFRA's stern action follows its investigation into the fraud involving CCD, which was revealed in 2022. The authority's scrutiny was triggered by information from SEBI about the misappropriation of Rs 3,535 crore from seven CCD subsidiaries to Mysore Amalgamated Coffee Estate (MACEL), a promoter-controlled entity. The investigation concluded that BSR & Co, which audited CCD's financial statements for the fiscal year ending March 31, 2019, failed to report the fraudulent diversion of funds and did not exercise due diligence.
Amit Somani, another partner at BSR & Co, has also been barred from practicing for five years and fined Rs 25 lakh. NFRA found both the audit firm and its partners guilty of significant "professional misconduct."
In response to the ruling, BSR & Co expressed disappointment, stating, "The firm is currently assessing next steps and cannot comment further at this stage. BSR remains committed to the highest standards of professionalism, quality, and integrity."
Maiya, when contacted, said, "This relates to a matter that was well publicized many years ago. I have no further comment to make on any matters currently being adjudicated or the NFRA order. I have always conducted myself with the highest standards of professionalism and integrity and will continue to do so. I’m evaluating all options, including appropriate legal recourse."
The NFRA's ruling highlights the critical role of auditors in maintaining corporate transparency and accountability. The penalties and bans reflect the authority's commitment to upholding high standards within the auditing profession.
Official copy of the order has been attached
CAclubindia
