NFRA Charges Audit Firm for Non-Disclosure of Interest Costs in Vikas WSP Audit

Aarti Maurya | Last updated: 14 June 2024

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The National Financial Reporting Authority (NFRA) has initiated proceedings against audit firm S. Prakash Aggarwal & Co. for professional misconduct during the statutory audit of Vikas WSP Limited for the 2019-20 financial year. This action follows information from SEBI indicating that Vikas WSP overstated its profits by failing to recognise significant interest expenses on its bank borrowings. The audit firm is accused of several lapses, including inadequate documentation and failure to verify crucial financial information from banks.

The National Financial Reporting Authority (NFRA hereafter) initiated action under Section 132(4) of the Companies Act 2013 (Act hereafter) against M/s S. Prakash Aggarwal Co., the Audit Firm, for professional or other misconduct in the statutory audit of Vikas WSP Limited for FY 2019-20. This was

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FAQ :

The NFRA is a regulatory body in India that oversees the auditing profession and financial reporting standards.

The audit firm was charged with professional misconduct for failing to disclose interest costs on borrowings in the financial statements of Vikas WSP Limited, leading to an overstatement of profits.

Lapses included insufficient documentation of audit procedures, lack of verification of interest certificates and bank balance confirmations, and inconsistencies in the Management Representation Letter.

Penalties can include fines ranging from at least one lakh rupees (for individuals) or five lakh rupees (for firms), potentially extending to multiple times the audit fees. Firms can also be debarred from undertaking audits.

SEBI provided information to the NFRA regarding Vikas WSP Limited's failure to recognise interest expenses, which led to the overstatement of profits and subsequent investigation by the NFRA.