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EXECUTIVE SUMMARY SUPPLEMENTARY AUDIT QUALITY REVIEW REPORT DATED 07-12-2020. Audit Engagement Audit of ILFS Financial Services Limited Done by Deloitte Haskins and Sells LLP for the Financial Year 2017-18. The Process National Financial Reporting Authority (NFRA) has conducted an Audit Quality Review (AQR) of the statutory audit for the year 2017-18 of ILFS Financial Services Limited (IFIN). The AQR Report (AQRR) has been issued on 12th December 2019. NFRA had examined only some se
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FAQ :
The supplementary audit quality review report, dated 7th December 2020, details findings from the National Financial Reporting Authority (NFRA) regarding the statutory audit of IL&FS Financial Services Limited (IFIN) for the financial year 2017-18, conducted by Deloitte Haskins and Sells LLP.
No, the report found the appointment of Deloitte Haskins and Sells LLP as the statutory auditor for IFIN in 2017-18 to be illegal, citing violations of Sections 141(3)(e) and 141(3)(i) of the Companies Act, 2013.
The report indicates that Deloitte failed to comply with auditing standards (SAs), did not obtain sufficient appropriate audit evidence, and made significant errors in areas such as valuation of derivative assets, reversal of provisions, and non-provision for impairment of investments.
The identified audit failures, particularly concerning unjustified valuation of a derivative asset, reversal of a general contingency provision, and non-provision for impairment in investments, led to an inflation of IFIN's reported profits by approximately £609 crore for FY 2017-18.
Yes, the NFRA's study found that Deloitte's IT processes and platform used for audit documentation had systemic and structural deficiencies, including a disregard for basic IT security principles, rendering the audit documentation unfit for purpose.
The report found the Engagement Quality Control Review (EQCR) mechanism used by Deloitte to be completely inadequate for its intended task.
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