NEW DELHI: The Supreme Court has allowed audit regulator National Financial Reporting Authority (NFRA) to continue its proceedings against chartered accountants and firms where no audit quality review reports have been prepared and final orders are yet to be passed.
During a hearing in a case challenging an order passed by the Delhi HC, a bench of Chief Justice Sanjiv Khanna and Justice Sanjay Kumar has, however, asked NFRA not to issue final orders in these cases and also said that final orders that have already been passed will not be given effect. NFRA had moved the SC challenging and order by Delhi HC bench of Justices Yashwant Varma and Dharmesh Sharma, raised concerns over NFRA not constituting divisions to separate powers for audit quality review and disciplinary actions and had sought fresh evaluation in 11 cases.
In the apex court, NFRA pleaded that the order is contrary to the ruling by NCLAT and SC in earlier cases. It has cited an SC judgment in the case of T K Harish, a branch auditor of DHFL, relating to siphoning off of Rs 31,000 crore of public money and a bank fraud of Rs 3,700 crore being investigated by other law enforcement agencies.
In its appeal in the case involving Snehal N Muzoomdar, NFRA has argued that the auditor was an engagement partner of a branch auditor of DHFL and the Delhi HC order has resulted in an anomalous situation where the proceedings and order passed in the case of one branch auditor has been upheld by SC, while the proceedings and order passed in the case of an engagement partner of another branch auditor of the very same company have been quashed.