Government of India
National Financial Reporting Authority
*****
7th Floor, Hindustan Times House,
Kasturba Gandhi Marg, New Delhi
Order No. 20012/2/2022 | Date: 21.04.2023
In the matter of CA Pankaj Kumar (ICAI Membership No. 091822) under Section 132(4) of the Companies Act 2013 read with Rule 11(6) of National Financial Reporting Authority Rules, 2018.
1. This Order disposes of the Show Cause Notice (`SCN’ hereafter) of even no. dated 28th September 2022, issued to CA Pankaj Kumar, partner of M/s SVP & Associates (ICAI Firm Registration No. 003838N), Delhi and the Engagement Partner (`EP’ or ‘Auditor’ hereafter) for the statutory audit of SRS Ltd (`the company’ hereafter) for the Financial Year (FY’ hereafter) 2017-18.
2. This Order is divided into the following sections:
A. Executive Summary
B. Introduction & Background
C. Major Lapses in the Audit
D. Other Lapses in the Audit
E. Articles of Charges of Professional Misconduct
F. Penalty and Sanctions
A. EXECUTIVE SUMMARY
3. The National Financial Reporting Authority (NFRA hereafter) is India’s independent regulator in respect of matters relating to accounting and auditing of prescribed class’ of entities which can be broadly described as `Public Interest Entities’ (PIEs hereafter).
4. Following a letter received from the Serious Fraud Investigation Office (SFIO hereafter), Government of India, which had investigated into the affairs of SRS Ltd and its group companies, NFRA initiated action under Section 132(4) of the Companies Act (Act hereinafter) for investigating into professional or other misconduct of the statutory auditors of SRS Limited. SRS Ltd, a listed entity, is one of the companies within the SRS Group dealing in the business of Jewellery, Cinema, Real Estate, Financial Services etc., and went into Corporate Insolvency Resolution Process (CIRP hereafter) by an order dated 21.08.2018 of the Hon. National Company Law Tribunal (NCLT hereafter), Chandigarh Bench.
5. M/s SVP & Associates was the Joint Statutory Auditor of SRS Limited for the FY 2017-18 and CA Pankaj Kumar was the EP for this audit. The Firm was responsible for audit of 39.71 % of the total assets of the company. This Firm and the EP were the Joint Statutory Auditor of SRS Limited for the FY 2016-17 also and had issued qualified opinion. They were also engaged for limited review of quarterly financial results (Interim Financial Results), required to be published as per SEBI Listing Obligations and Disclosure Requirement (LODR) Regulations 2015, during the financial year 31.03.2018 and had consistently issued ‘Qualified’ opinion on those financial results in spite of serious issues and questions relating to recoverability of trade receivables of overseas division, compliance with the provision of the Act relating to creation of Deposit Repayments Reserves and decline of the net worth due to write off of huge amount of trade receivables in the review report for Q3 of FY 2017-18.
6. Based on the perusal of the issues raised in the SFIO report and the preliminary examination of the financial statements of SRS Ltd., it was observed that there was a prima facie case for investigation and/or further action by the NFRA. The EP and the Firm were asked on 18.07.2022 to submit the Audit File and, based on its examination, an SCN dated 28.09.2022 identifying failures and negligences was issued to the EP in terms of Rule 11 of the NFRA Rules, 2018. In the interest of natural justice, the EP was also given a personal hearing on 03.03.2023.
7. The Audit lapses identified, based on the examination of the Audit File and the material on record and after considering the reply of the EP , have been categorized into major lapses and other lapses and are discussed in section C and D respectively of this Order. These lapses relate to the EP’s failure to identify and report material mistatements in the financial statements, standard of audit work performed falling way below the mandatory standards prescribed under the Act and required of an auditor of a PIE. The EP’s opinion that the financial statements reflected ‘true and fair view’ in accordance with accounting principles generally accepted in India and the provisions of the Act was found not supported by the appropriate audit evidence. The manner in which the audit was conducted, failed to meet the requirements of the SAs, the Act and the Code of Ethics in a number of significant aspects which demonstrated a serious lack of competence on the part of the EP.
8. The EP ignored in the performance of the audit, several indicators of potential fraudulent transactions he was privy to; such as unusually high provision of 1,295.01 crores for bad/doubtful debts in respect of trade receivables (99.85% of the total trade receivables), and substantial decline of 207.74 crores in the carrying amount of the inventories. However, the EP failed to review these abnormal events for reporting under section 143(12) of the Act choosing to report only 10-11 crores of fraudulent transactions, which had already been reported by the Company to stock exchanges.
9. The EP failed to demonstrate sufficiency and appropriateness of audit work in virtually every aspect of the audit of the financial statements i.e., Audit Strategy, Planning, Determining Materiality, Assessment of Risk of Material Misstatement and evaluating the audit results. The EP also failed to demonstrate compliance with the requirement of the Standards on Auditing concerning the EQCR and submitted false information on the appointment of an EQCR who, when confronted, denied having any formal appointment.
10.The EP also ignored a number of indicators pointing to the abnormal state of affairs in the Company having adverse implications for the true and fair view of financial statements. The EP failed to display professional scepticism and due diligence in reaching his audit opinion in accordance with SA 570 and SA 705.
11. Finding him guilty of professional misconduct, this Order imposes on the EP, CA Pankaj Kumar a monetary penalty of 300,000/- (Rupees Three Lakhs); and debars him for 3 (Three) years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.
B. INTRODUCTION & BACKGROUND
12. The National Financial Reporting Authority (`NFRA’ hereafter) is a statutory authority set up u/s 132 of the Companies Act 2013 to monitor implementation and enforce compliance with the auditing and accounting standards and to oversee the quality of service of the professions associated with ensuring compliance with such standards. NFRA is empowered u/s 132 (4) of the Act to investigate into professional or other misconduct committed by any member or firm of chartered accountants in respect of the prescribed classes of bodies corporate or persons, to exercise the powers vested in a civil court while trying a suit and impose penalty for professional or other misconduct of the individual members or firms of chartered accountants.
13. The statutory auditors, both individual and firm of chartered accountants, are appointed by the members of companies under section 139 of the Act. The statutory auditors, including the Engagement Partners (EP) and the Engagement team that conduct the audit, are bound by the duties and responsibilities prescribed in the Act, the rules made thereunder, the Standards on Auditing (`SA’ hereafter), including the Standards on Quality Control (SQC) and the Code of Ethics, the violation of which constitutes professional misconduct, and is punishable with penalty prescribed under section 132 (4) (c) of the Act.
14. NFRA received from the Serious Fraud Investigation Office (SFIO) a letter dated 31.08.2021 sharing the findings of their investigation into the affairs of SRS Ltd and the Group for necessary action against their statutory auditors. SRS Ltd is one of the companies within the SRS Group and was incorporated on 29.08.2000. SRS was a listed company and was delisted on 27.08.2021. The Group had presence in the sectors of Jewellery, Cinema, Real Estate, Financial Services etc. The investigation report by SFIO inter alia revealed that the Company and its Group Companies had presented financial statements containing false statement of debtors and indulged in the malpractice of round tripping and layering of transactions resulting in inflated purchases and sales. The company went under Corporate Insolvency Resolution Process (CIRP) by the orders of the NCLT, Chandigarh Bench dated 21.08.2018, on an application made by the State Bank of India following SRS’ default on repayment of financial debt of 543.36 crores.
15. M/s SVP & Associates (Audit Firm hereafter) was the Joint Statutory Auditor of SRS Ltd for the FY 2017-18 and CA Pankaj Kumar was the Engagement Partner (EP hereafter) for this audit. As mentioned in the other matter section of the audit report, the Firm was responsible for audit of 39.71% of the total assets of the company. This Firm and the EP were also the Joint Statutory Auditor of SRS Limited for the FY 2016-17 and had issued a qualified opinion. Also, they were engaged for limited review of quarterly financial results, required to be published as per SEBI LODR Regulations 2015, for the FY 2017-18 and had issued a ‘Qualified’ opinion on those financial results in respect of recoverability of trade receivables of overseas division, non-compliance with the provision of the Act relating to creation of deposit repayments reserves and erosion of net worth in Q3 of FY 2017-18 due to write off of huge amount of trade receivables.
16. Vide letter dated 18.07.2022, NFRA called the Audit File from the EP and on his request granted extension of time for submission of the Audit File. The EP submitted the Audit File on 31.08.2022.
17. On examination of the Audit File and other relevant material available on record, and on being satisfied that sufficient cause existed to take action under sub-section (4) of section 132 of the Companies Act, a Show Cause Notice (SCN hereafter) was issued to CA Pankaj Kumar on 28.09.2022 in terms of Rule 11 of the NFRA Rules 2018, asking him to show cause why action should not be taken against him for professional misconduct in respect of his performance as the EP on behalf of M/s SVP & Associates, the Statutory Auditor of SRS Ltd for the FY 2017-18. The EP was charged with professional misconduct of:
i. Failure to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary in making such financial statement where the CA is concerned with that financial statement in a professional capacity.
ii. Failure to report a material misstatement known to him to appear in a financial statement with which the CA is concerned in a professional capacity.
iii. Failure to exercise due diligence and being grossly negligent in the conduct of professional duties.
iv. Failure to obtain sufficient information which is necessary for expression of an opinion, or its exceptions are sufficiently material to negate the expression of an opinion.
v. Failure to invite attention to material departure from the generally accepted procedures of audit applicable to the circumstances.
18. The EP vide letter dated 26.10.2022 requested for extension of time for submission of reply, which was granted up to 11.11.2022. The EP submitted his reply vide email dated 17.11.2022, which also contained some new working papers as additional evidence. The EP submitted that he had not been provided with full SFIO investigation report, the MCA letter to SFIO and the letter of SFIO to NFRA. In this regard, it is noted that the EP had been provided as annexures to the SCN the relevant extracts of the SFIO investigation report that contained 1,351 pages relating to the fraud and financial irregularities being investigated by SFIO in respect of entire SRS Group. The SCN also provided an opportunity for a personal hearing to the statutory auditor, which was availed by him on 03.03.2023.
19. We have perused all the material on record including the written and oral responses of the EP. The failures on the part of the EP to fulfil responsibilities relating to a suspected fraud in Trade Receivables and Inventories, Going Concern, Audit Documentation, are identified as major lapses and are discussed in Part ‘C’ of this Order. Other lapses viz. failure in fulfilling duties related to Engagement Quality Control Review, compliance with the requirements of Joint Audit, evaluation of Plant, Property and Equipment etc., have been discussed in Part ‘D’ of this Order.
Part C: Major Lapses in the Audit
C.1 Suspected Fraud: Lapses in fulfilling auditor’s responsibilities
20. The EP was charged with failure to adhere to the responsibilities relating to fraud/suspected fraud as required by para 16 and 24 of SA 2402 which states that while performing risk assessment procedures, the auditor shall perform the procedures to obtain information for use in identifying the risks of material misstatement due to fraud. Further, the auditor shall evaluate whether the information obtained from the other risk assessment procedures and related activities performed indicates that one or more fraud risk factors are present.
21. In his written reply, the EP submitted that during the course of audit, he came to know about the FIR against the then Managerial Personnel of SRS Group including its chairman lodged on 04.03.2018 and the company’s intimation dated 07.05.2018 to the stock exchanges about the fraud/ default by promoters or key managerial personnel or arrest of key managerial personnel or promoter. The EP stated that they made enquiry with the management of the company on 06.12.2018 however, no substantial information about the alleged fraud/default/arrest was made available by the management and also no other fraud or suspected fraud was identified or informed by the management or any other personnel. The EP further stated that by keeping a prudent and conservative approach of Section 143(12) of the Act, he ended up reporting the matter to the MCA in the form of ADT-4 on 10.12.2018, although they were not obligated to report the same as alleged fraud/default/arrest was not identified by the auditors but by the company. The EP has also stated that the FIR and its intimation to the stock exchanges posed risk of fraud or material misstatement in financial statements, and therefore with sceptic mindset they extensively did internal control checks, analytical procedures, substantive testing and sampling as required by para 22-24 of SA 240 such as sending balance confirmations, identifying operational and non-operational sites, obtaining agreements relating to vendors to identify the validity and expiry, physical verification of fixed assets, examining unusual and high value transactions etc. and as a result of such audit queries, the discrepancies that were identified were duly accommodated in the financial statements of the company in form of making provisions of doubtful debts (Rs. 1,295.01 crores), provisions for doubtful recoveries of advance to suppliers & creditors (Rs. 8 crores), provision for advances to employees (Rs. 1.31 crores), provision for security deposits (Rs. 0.26 crores), writing off fixed assets (Rs. 9.08 crores) and examining advance received (Rs. 50 crores) etc.
22. We find that the reply and explanation given by the EP are misleading as there is no documentation in the Audit File to show that analytical procedures and substantive testing as claimed by the EP in his reply to the SCN were performed by the EP as required by SA 240. There were several strong indications of unusual and suspicious activities as follows:
i. There was a drastic decline in the inventory level from 208.22 crore on 1 April 2017 to 0.48 crore on 31 March 2018.
ii. Huge provisions were made against the Trade Receivables during the preceding year (Rs. 93.16 crore), which had increased dramatically to 1295.01 crore in 2017-18.
iii. The Company had filed a report with BSE/NSE in May 2018 that its chairman had been arrested for fraud. Yet, we do not find any audit evidence in the Audit File that the EP performed the required audit procedure. The claim of the EP in his reply to the SCN that lie performed audit procedures as a result of which the company made provisions for the doubtful debts etc. is therefore dismissed as an afterthought.
23. An auditor is duty bound to exercise due professional care and professional skepticism in performance of the audit that includes a questioning mind and a critical assessment of the audit evidence. More so, since the audit firm and the EP were the auditors of the company for the previous FY i.e., 2016-17 also, they were privy to the operations and goings on in the company and were therefore required to be more alert and vigilant to the existence of fraud risk factors.
24. We find that the EP had reported, in clause (x) of CARO report, that the company had intimated the stock exchanges regarding the fraud/default by the promoters/key management persons/entity involving estimated amount of Z 10-11 crores. However, we note that the EP had ignored other strong indicators of several other potential frauds. We note that the company had provided for unusually high amounts of doubtful debts (under Trade Receivables) of 21295.01 crores as on 31 March 2018 compared to Z 93.16 crore in the previous year 2016-17. The Audit File has no evidence that the EP had applied professional skepticism to probe and report on the potential fraud reflected by such huge amounts of provisioning and their eventual write off. Similarly, we find that there was a drastic decline in the inventory from Z 208.22 crore to Z 0.48 crore only (decline of 99.76%) but there is no evidence in the Audit File of a sound audit examination of the reasons of this decline. Both these events led to the net worth of the company turning into negative (minus Z 977.4 crores as of 31.03.2018) as against the positive net worth of Z 483.46 crores as of 31.03.2017. All these adverse indicators in the financial affairs of the company should have aroused the EP’s suspicion and professional scepticism about the possibility of fraud in the company. However, instead of performing detailed audit procedure in the matter the EP made a casual and irresponsible statement in his audit report that “Based upon the audit procedure performed……., we are unable to comment whether or not there was any fraud by the company or on the company by its officers or employees.”
25. We also note that the EP had also issued quarterly review reports on internal financial results of the Company for three quarters viz. quarters ending 30.06.2017, 30.09.2017 and 31.12.2017 during the FY 2017-18. These quarterly review reports were qualified on account of uncertainty about recovery of trade receivables, and non-compliance with the provisions of the Act relating to creation of deposit repayment reserves and highlighted the company’s difficulties in repaying the Bank’s credit facilities. More importantly, the quarterly review report dated 13.02.2018 for the quarter ending 31.12.2017 was qualified on account of erosion of net worth due to write off of huge amount of trade receivables of Z 825.34 crores. It is evident that the EP was aware of these strong indicators of serious mismanagement and potential fraudulent transactions in the company much before he came to know of the FIR against the Chairman of the Company on 06.03.2018. However, these indicators failed to arouse his suspicion which is difficult for anyone to believe and for the EP to justify. In spite of these alarming signals, the EP did not initiate steps that are required under section 143 (12) of the Act read with Rule 13 of Companies (Audit and Auditors) Rule 2014 for reporting the matter to the Central government. Instead, the EP confined himself to reporting to the Central Government through ADT-4 filing dated 10.12.2018 a fraud committed by the promoters/key management persons/entity, which the company had already intimated to the stock exchanges on 07.05.201.8.
26. The replies and explanations given by the EP regarding his claim of having done extensive audit work with reference to para 22-24 of SA 240 are misleading and are not supported by audit documentation. This is evident from the following discussion:
i. Para 22 of SA 240 requires the EP to evaluate the possibility of Risk of Material Misstatement (RoMM) due to fraud based on the unusual or unexpected relationships identified by performing analytical procedures. However, the audit work papers references (Page No. 91 -94 of Audit File No.2, annexed as Exhibit 1 with this order) given by the EP are routine audit queries or requests for some client documents and by no stretch of imagination can be called analytical procedures. The EP has either no knowledge/ex-perience of analytical procedures or is trying to mislead the NFRA to cover up his gross negligence as an auditor.
ii. Para 23 and 24 of SA 240 require the EP to evaluate the possibility of RoMM due to fraud based on other information obtained about the entity and its environment. However, we find that the audit work relied upon by the EP, as discussed below, does not provide any confidence in the quality and integrity of the audit work performed by the EP:
a) In respect of the examination of unusual and high value transactions, the EP has referred to work papers relating to enquiry about high value (Z 50 crores) advance received from a third party and outstanding debit balance of 0.31 crores. These work papers (Page No. 77-78 Annexure R-10 of reply to SCN, annexed as Exhibit 2 with this order) are copy of email sent by the EP and cryptic reply sent by that third party saying, “will check and get back to you on below confirmation” . There is no evidence of what further audit work was done on this and how the misstatements, if any, were resolved. This reflects casual and incomplete work of the EP in respect of such unusual and high value amounts.
b) In respect of provision of huge amount of 1,295.01 crores for doubtful trade receivables, the EP has referred as audit evidence to an email sent by an official of the company with four attachments with file names “Advance to Creditors”, “Advances to employees”, “Advances to Suppliers’ and “Trade Receivable’ (Page No. 75 Annexure —R-8 of reply to SCN annexed as Exhibit 3 with this order), though the detailed contents of the attachments have not been provided. We note that though the substantial amount of trade receivables for which the provision was made apparently related to the Gold and Jewellery Division, which was audited by the other Joint Auditor, there is no evidence that the EP exercised due care and diligence before signing off on the provision of 1,295.01 crores for doubtful debts in the joint audit report which made a false statement that the audit had been carried out in accordance with the applicable SAs. There is no indication in the audit work papers whether any discussion took place between the EP and the other joint auditor with respect to the sudden provision for doubtful receivables of huge amount.
c) Para 8 of SA 230 states that the auditor shall prepare audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand, among other things, the nature, time and the extent of the audit procedure performed. Our review of the EP’s work relating to obtaining confirmations of outstanding balances of debtors, creditors and advances received does not give a satisfactory account of the audit work performed nor does it reflect the seriousness of the audit work, particularly, in the circumstances where there was suspicion of fraudulent activities as indicated by mysterious charge off of abnormal amounts to the profit or loss account. The audit work papers found on page 1 to 285 of Audit File 4 indicate a casual and cavalier approach by the Auditor; there is no clarity on what was the population size of the balances for obtaining confirmations, the sample selection approach, the extent of testing (coverage percentage), who performed and who reviewed the audit procedure, and more importantly, how the discrepancies were dealt with by the EP. As a result, an experienced auditor having no previous connection with the audit cannot make any sense out of these work papers, therefore there is a serious breach of compliance with the requirements of SA 230.
d) In respect of audit samples, it can be seen from the audit query sheets that the auditor has done sampling in a very superficial manner as he left the sample selection at the discretion of the company management as seen from his request to the company “Kindly provide the workings for the below mentioned expenses along with 10 Vouchers of highest value each for respective segment.” This is not what is required to be done under SA 5303 relating to audit sampling.
iii. In this regard, the EP’s claim in his reply that he had performed internal control checks, analytical procedures, substantive testing and sampling as required by paras 22-24 of SA 240 is baseless as there are no audit documents which demonstrate performance of any such internal control checks and procedures.
27. In light of the foregoing, we find that the EP displayed gross negligence and complete lack of due diligence in ignoring strong indicators of potential fraud and thereby not fulfilling his responsibility under section 143 (12) of the Act and his duty in accordance with SA 240.
C.2 Failure to comply with the requirements of SA 2304 read with para 75 of SQC 15
28. The EP was charged with failure to adhere to the responsibilities relating to audit documentation as required by SA 230 read with para 75 of SQC 1, which requires preparation of audit documentation on a timely basis, documentation of the nature, timing and extent of audit procedures such as who performed the audit procedures, when such audit procedures were performed, who reviewed the audit work, what discussion of significant matters took place with management & TCWG6 and the assembly of the Audit File within 60 days after the date of the auditor’s report.
29. The EP has responded to the charge vide para 16 of his reply stating that the charge is incorrect, wrong and denied. However, the EP has not given any explanation, reasons and documentation to support his denial of the charges.
30. Our analysis of the EP’ s reply and other related material shows that:
i. The Audit File lacked many significant and critical working papers such as-
a. Audit Plan and Audit Programme;
b. Working papers for setting materiality and performance materiality;
c. Auditor’s evaluation the appropriateness of management’s use of the going concern assumption;
d. Auditor’s assessment of the fraud risk in the company;
e. Details of the EQCR, its team and the review work performed by the EQCR;
f. Minutes of the meetings amongst the members of engagement team, with joint auditors, with management and TCWG.
ii. Virtually, most of the Audit Work Papers submitted do not meet any of the basic requirements of Para 8 and 9 of SA 230 reproduced below:
“8. The auditor shall prepare audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand: (Ref Para. A2-A5, A16- A17)
(a) The nature, timing, and extent of the audit procedures performed to comply with the SAs and applicable legal and regulatory requirements; (Ref Para. A6-A7)
(b) The results of the audit procedures performed, and the audit evidence obtained; and
(c) Significant matters arising during the audit, the conclusions reached thereon, and significant professional judgments made in reaching those conclusions. (Ref Para. A8-All)
9. In documenting the nature, timing and extent of audit procedures performed, the auditor shall record:
(a) The identjing characteristics of the specific items or matters tested; (Ref Para. Al2)
(b) Who performed the audit work and the date such work was completed; and
(c) Who reviewed the audit work performed and the date and extent of such review. (Ref Para. A13)”
iii. Further, we find that the index of Audit File no. 1 submitted by the EP shows Audit Programme at page number 146-147, but the Audit File contains page no. 1 to 145 only and does not include any audit program in it. This indicates the Audit File had not been completed even by the date of submission to NFRA i.e., 31.08.2022. Based on the date of audit report of 06.02.2019, the Audit File was required to have been archived by 07.04.2019. That the Audit File had remained incomplete even by the date of submission to NFRA shows that it remained prone to tampering and its integrity was doubtful.
iv. Tampering with the integrity of the Audit File has been a serious concern and casts a shadow on the audit work, In a number of cases, the PCAOB7, U.S. Regulator has held the auditor guilty of noncompliance with the professional behavior and initiated penal actions against the auditors for tampering with the Audit Files subsequent to the date of audit report and/or archival of the Audit File and imposed severe penalty.
31. Appropriate & timely documentation of the audit procedures performed, audit evidence obtained, conclusions drawn by the EP and the archival of the complete audit documentation within a reasonable time is the backbone of the integrity of audit. It is the audit documentation which acts as evidence that the audit was planned and performed in accordance with SAs and applicable legal and regulatory requirements. Further, audit documentation acts as the basis for the audit opinion drawn in the audit report.
32. Inadequate, improper documentation and non-archival of Audit File within the stipulated time is a serious deficiency in performing an audit. In absence of proper audit documentation, there is no way for us to ascertain whether the required audit procedures were performed at all. Therefore, we are left with no option but to draw a conclusion that the audit work as claimed was not performed.
33. Therefore, we find the reply and explanation of the EP unacceptable and conclude that the EP was grossly negligent in performing his duty in accordance with SA 230 and Para 75 of SQC 1.
C.3 Lapses relating to Going Concern basis of accounting
34. The EP was charged with noncompliance with SA 5708 which deals with auditor’s responsibilities in the audit of financial statements relating to a ‘Going Concern’. As on 31.03.2018, the Company had several adverse indicators in the financial statements that could raise serious doubts about the ‘Going Concern’ assumption. Such indicators included:
i. A net loss of 21,460.87 crores in the FY 2017-18 and accumulated losses of Z 1,384.69 crores as on 31.03.2018.
ii. Negative net worth of Z 977.40 crores due to provision for doubtful trade receivables, advances and write off of PPE and Inventories etc.
iii. Obligations towards fund-based borrowings aggregating to 21,007 crores and towards public deposits aggregating 89.03 crores.
iv. Defaults in repayment of borrowings from banks amounting to Z 1,001.28 crores (Principal and Interest).
v. Discontinuation of many business divisions.
Despite deterioration in the financial position as indicated above, the financial statements were prepared on the assumption that the entity was a ‘Going Concern’ and would continue its operations for the foreseeable future.
35. In such situations, Para 12 read with Para A7 and A9 of SA 570, requires the EP to evaluate management’s assessment of the entity’s ability to continue as a Going Concern.
36. In his written reply, the EP submitted that he attempted to evaluate the management’s assessment of the Going Concern by sending an e- mail dated 24.09.2018 inquiring about the going concern assumption for the preparation of financial statements of the company for FY 2017-18. The management vide its email dated 30.102.18 replied that CIRP was initiated against the company vide order dated 21.08.2018 passed by Hon. NCLT, Chandigarh Bench and an IRP professional had been appointed who was making effort to manage the company as Going Concern.
37. The EP further stated that he had discussions with the management on the projected revenue from the operational divisions/ segments of the company to evaluate the management’s assessment of going concern; however, no documentations were provided by the management to substantiate the going concern assumption except a management representation letter (MRL) dated 06.02.2019 stating that resolution and revival of the company was possible in foreseeable future.
38. The EP concluded that he found the responses of the management not tenable to substantiate the company’s ability to continue as going concern and, based on the evaluation of the past and the current indicators like the ongoing CIRP, discontinuance of divisions/ segments, losses in the previous financial year, financial crunch, the company’s inability to pay off its debt obligations, statutory dues, creditors etc on timely basis and the absence of concrete projections/ information on the revival of the company, he believed that there were sufficient indicators to conclude that material uncertainty existed about the company’s ability to continue as going concern and accordingly, in compliance with para 23 of SA 570, he gave a Qualified opinion.
39. We have considered the reply of the EP and other relevant material on record and find that:
i. There is no evidence in the Audit File of any assessment having been made by the EP of the Going Concern assumption. Para A3 of SA 570 is an illustrative list of events/condi-tions that cast doubt on the ability of an entity to continue as a Going Concern. There is no evidence of the EP having evaluated these indicators.
ii. Para 23 of SA 570 states that if adequate disclosure about the material uncertainty is not made in the financial statements, the auditor shall express a qualified opinion or adverse opinion, as appropriate, in accordance with SA 705 (Revised). Para 8 of SA 705 (Revised) requires that the auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.
iii. In the present case, the EP concluded that material uncertainty existed about the company’s ability to continue as going concern and expressed a qualified opinion on this basis without adequately documenting it. However, the EP failed to comply with paragraph 23 of SA 570 that if adequate disclosure about the material uncertainty is not made then the auditor shall express a qualified opinion or adverse opinion, as appropriate, in accordance with SA 705. In terms of paragraph 7 and 8 of SA 705 an auditor shall express an adverse opinion if the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements are both material and pervasive to the financial statements. In other words, while the Audit File should provide adequate justification for the EP going for either qualified or adverse opinion in accordance with SA 705, there is nothing in the Audit File to support the EP going for a qualified audit opinion without determining whether the material uncertainty was also pervasive. The indicators as mentioned in para 33 and para 37 above as mentioned by the EP in his reply, are prima facie not only material as concluded by the EP but also pervasive in nature. But the EP has not documented the basis for his decision to give a qualified opinion as against the other option of adverse opinion. Therefore, we find that the EP was not in compliance with SA 570 and 705 insofar as it relates to the EP’s audit opinion.
40. The Auditor’s Opinion in the audit report holds very high value as it is an assurance given by the auditor to the stakeholders about the True and Fair status of the financial statements. The auditor’s failure to give an appropriate audit opinion in accordance with the SAs and other applicable law is not just negligence of the fundamental principle of professional competence and due care given in Code of Ethics’ but is also an act of breach of trust and misleading all the users of the financial statements.
41. We, therefore, find the reply and explanation of the EP unacceptable, and hold him grossly negligent in performing his duty in accordance with SA 570 and SA 705.
Part D: Other Lapses in the Audit
D.1 Failure to comply with the requirements of SA 30010 and SA 32011
42. The EP was charged with failure to develop and document the audit plan and audit strategy that sets the scope, timing, and direction of the audit as required by SA 300 and with failure to determine materiality for the financial statements as a whole while establishing the audit strategy as required by SA 320.
43. Responding to the charge related to SA 300, the EP in his written reply stated that he established the overall strategy, plan, programme and checklist for the audit of SRS Limited for FY 201718 which he also intended to submit as a part of Audit File No. 1 on pages 146-147, however due to an inadvertent error, the same got left to be attached in the Audit File. The EP in his written reply to the SCN, has attached a copy of his audit strategy, audit plan, audit program and checklist as Annexure R-23 to the SCN.
44. Responding to the charge related to SA 320, the EP stated that the materiality was set at 1% of the total assets and performance materiality was set at 75% of the overall materiality. The EP also attached a document as Annexure R-23 related to audit program which contained one paragraph on materiality.
45. Our analysis of the EP’s reply and other related material shows that:
i. There is no documentation in the Audit File regarding audit plan, audit strategy and setting of materiality. The EP submitted a document along with his reply to the SCN which does not bear any sign, seal or date rendering its authenticity and integrity doubtful.
ii. The document submitted by the EP as R-23 and captioned as Audit Programme for 2017-18 was not a part of the Audit File. It is a 2 (Two) page document (annexed as Exhibit 4 with this order) establishing overall strategy, plan, programme and materiality. Its authenticity and integrity are highly doubtful as it does not bear any date and signature of the EP or Engagement Team Members or EQCR or that of other Joint Auditor, nor does it bear any seal of the Audit Firm. The action of the EP in producing documents that were not part of the Audit File and that remain unauthenticated show his negligence and lack of due diligence apart from leaving scope for tampering of the Audit File subsequent to the audit. However, without prejudice to this foregoing, we have reviewed these pages and observe as follows:
a. It contains generic statements about the ‘Audit Objective’ and does not mention about the basic aspects like which entities they are auditing, the group structure of the audited entity, the legal framework under which the audit is being performed, details of the other Joint Auditor, their key reporting obligations such as CARO, ICFR12, in addition to the report on audit u/s 139 of the Act, their review engagements of quarterly financial results under SEBI LODR etc.
b. In Sub-section 5 of the so-called audit strategy and plan document, the EP has documented his work on determination of Materiality and Performance Materiality. Here, the EP has only attempted to document the conceptual basis of determining quantitative threshold of Materiality and Performance Materiality i.e., 1% of the total assets and 75% of the overall materiality, respectively. The EP has neither quantified the actual amount of Materiality nor mentioned specific details of benchmark i.e., the date as of which the total assets were considered for computing this materiality, the actual amount of total assets on that date, whether this was based on total assets of the Company as a whole or those of the divisions under his audit responsibility etc. Further, the EP has not documented justification for setting the Performance Materiality at a high percentage (75%) of overall materiality.
c. The other audit work papers (which are mostly query sheets or ledger copies) submitted by the EP have no reference to any of the so-called audit plan or audit programme document, which clearly evidences that this so-called audit strategy and plan document was manufactured in response to the SCN issued by NFRA.
46. The preparation of the audit plan and strategy by the EP is a fundamental building block of an audit. Further, determining materiality is of such critical importance in an audit that para 10 and 11 of SA 320 use the expression ‘shall’ to put the unconditional obligation on the part of the EP to determine materiality. By failing to plan the audit and set materiality, the EP has exhibited a casual approach towards the audit of a PIE. We therefore find that the EP was grossly negligent in performing his duty and failed to comply with the requirements of SA 300 and SA 320.
D.2 Lapses in fulfilling duties related to Engagement Quality Control Review (EQCR) Partner
47. The EP was charged with failure to comply with the requirement of para 19 (a) of SA 22013 which states that for the audits of financial statements of listed entities, the EP shall determine that an EQCR has been appointed. Further, the EP shall not date the auditor’s report until the completion of the engagement quality control review.
48. In his written reply, the EP stated that Mr Apoorve Bansal (Chartered Accountant and Lawyer) having rich knowledge and diverse experience was appointed as the EQCR and discussed matters with him on emails as well as in person during the audit and his contribution proved to be vastly crucial to conclude the audit. In his email dated 02.03.2023 to NFRA, Mr Apoorve Bansal stated that he was the EQCR for the statutory audit of SRS Limited for the FY 2017-18 and his appointment was a verbal appointment; that he qualified as a Chartered Accountant in May 2016, had worked only with SVP & Associates and had not worked as an Audit Engagement Partner of any listed entity. The firm in its email dated 14.03.2023 stated that the appointment of CA Apoorve Bansal remained to be documented by the concerned personnel. Mr. Apoorve Bansal accompanied the EP in the oral hearing held on 03.03.2023 and confirmed that he was the EQCR but there was no formal appointment.
49. From our analysis of the EP’s reply and other related material we find that:
i. There is no formal appointment of the EQCR in the audit engagement and the EP has failed to ensure the determination of an EQCR for the audit of a listed entity in accordance with SA220. Further, the EP has misled NFRA by portraying CA Apoorve Bansal as having rich knowledge and diverse experience which is contradicted by CA Apoorve Bansal himself by informing about his inexperience (he qualified as a CA in May 2016 only) and lack of expertise of auditing listed companies, which fails to meet the requirements of para 68 of SQC 1.
ii. The EP attached certain emails exchanged between him and the EQCR, which were not in the Audit File. The emails dated 1.10.2018, 8.10.2018, 9.10.2018 and 10.11.2018, with the attachments titled “Management Query”, “SRS Ltd audit queries”, “SVP Query Draft Notes for balance sheet” respectively, do not clearly indicate the nature of queries, whether they related to any significant matters or how they were resolved.
50. In the audit of financial statements of a listed entity, the role of an EQCR is important for ensuring quality, as the EQCR evaluates the significant judgments made by the engagement team, reviews the engagement team’s evaluation of firm’s independence, checks whether the appropriate consultation has taken place on difficult or contentious matters and reviews the related conclusions reached in forming the overall audit opinion.
51. In the absence of any documentary evidence of EQCR review, other than a few email exchanges, such as signature on audit work papers relating to significant matters or any sign off memo on the financial statements, one cannot conclude whether CA Apoorve Bansal was indeed appointed as EQCR and performed the role of EQCR as envisaged under para 20 and 21 of SA 220.
52. The submissions made by the EP and EQCR are misleading, false and are in breach of the fundamental principal of “Integrity” and “Professional Behaviour” of the Code of Ethics issued by ICA’.
53. The EP is found not only grossly negligent in performing his duty in violation of SA 220 but also guilty of submitting false and misleading information.
D.3 Failure to comply with the requirements of Joint Audit
54. The EP was charged with failure to adhere to the responsibilities relating to joint audit as required by para 2 and para 3 of SA 299 which states that the joint auditors shall mutually discuss and divide the audit work between themselves in terms of audit of identifiable units or specified areas and this division should be adequately documented.
55. In his written reply, the EP submitted that the work relating to the audit of SRS Limited for the FY 2017-18 was discussed between both the firms i.e., SVP & Associates and Oswal Sunil & Company and they mutually agreed to the work allocation in terms of SA 299 which clarifies the division of work between joint auditors. The EP also annexed a copy of an e-mail dated 29.07.2017 showing the division of work. He categorically stated that the work allocation was not decided by the management of the company. The EP also stated that the statement made by him to the SFIO that the division of audit work had been made by Anil Jindal, Chairman and Managing Director of SRS Ltd, cannot be relied upon because the statement was obtained from him by employing pressure tactics and putting him under mental stress and panic.
56. Our analysis of the replies by the EP and related documents shows that:
i. In accordance with the requirement of para 2 and para 3 SA 299, the EP was professionally duty bound to document the division of work among joint auditors and the areas of work to be covered by them. But no such documents were found in the Audit File. Further, the document attached by the EP with the email dated 29.07.2017 at Exhibit 5 annexed with this order, though bound to be rejected as it is not part of Audit File, is a generic document and does not reflect the detailed division of the audit work between the joint auditors as required by SA 299. Further, the said document does not bear any seal and signature of the joint auditors thereby raising serious doubts about the genuineness and integrity of such an important document.
ii. The claim of EP that his statement regarding the work distribution between the joint auditors was decided by Mr Anil Jindal, Chairman and Managing Director of SRS Ltd was obtained by SFIO employing pressure tactics and putting him under mental stress and panic does not carry any credence given the lack of adequate documentation in the Audit File regarding the division of work. In the absence of any evidence of the joint audit having been mutually decided, we find that the EP compromised with the basic principle of independence of the auditor by allowing the Company’s management to decide the allocation of work between the joint auditors.
57. We therefore, find the EP to be grossly negligent by not adhering to the requirements of para 2 and para 3 SA 299 which requires mutual discussion and adequate documentation of the division of work.
D.4 Non-compliance with provisions of the Companies Act 2013
58. The EP was charged with failure to comply with Section 143 (9)14 of the Companies Act, 2013 which requires that every auditor shall comply with the SAs.
59. Responding to the charge, the EP in his written reply stated that the Auditing Standards are a set of guiding principles, and he has complied with the relevant guiding principles laid down by the SAs while conducting the audit of SRS Ltd.
60. From our analysis of the EP’s reply and other related material we find that:
i. The reply and explanation given by the EP are baseless and misleading in the view of the errors and omissions mentioned in the foregoing paragraphs of this Order wherein the noncompliance with various SAs stands proved.
ii. The EP appears to be ignorant of the fact that the Requirement section of the SAs, in effect since 01.04.2008, use the word “Shall”, as opposed to the earlier “Should’ in line with the change in the ISAs15 issued by the IAASB16 pursuant its clarity project. In view of this, there is no merit in the averment of the EP that SAs are simply a set of guiding principles, when they are mandatory obligations on the part of EP.
61. Thus, the reply and explanation of the EP cannot be accepted and we, therefore, find that the EP was grossly negligent in performing his duty in violation of Section 143 (9) of the Companies Act, 2013.
D.5 Failures in Evaluation of Property, Plant and Equipment (PPEs)
62. The EP was charged with failure in evaluation of PPEs of the company amounting to 88.07 crores in violation of Para 15, 16 of SA 2001‘ and Para 6 of SA 50018.
63. Responding to the charges, the EP in his written reply stated that the statutory audit of SRS Limited for the FY 2017-18 was a joint audit and hence there were divided responsibilities between the joint auditors including physical verification of PPEs. Also, of the total value of PPEs of the company as on 31.03.2018, whose physical verification was not done, only PPEs worth 9 lacs pertain to him while PPEs worth 88.04 crores pertain to the other joint auditor,
64. In the light of this reply of the EP, the charge stands dropped.
D.6 Failure to report non- compliance with Ind AS 36 Impairment of Assets
65. The EP was charged with failure to report noncompliance with Ind AS 36 Impairment of Assets.
Responding to the charges, the EP in his written reply stated that investments in SRS Entertainment India Ltd amounting to 26.66 crores and SRS Smart Retail Ltd amounting to Rs. 0.10 crores were recorded in the accounts of “Corporate division/ segment” of the company which was under the purview of the other joint auditor i.e., Oswal Sunil & Company as per the division of work.
66. Considering the EP’s reply, the charge against him stands dropped.
D.7 Inadequate disclosure under Companies (Auditor’s Report) Order, 2016
67. The EP was charged with inadequate disclosure under CARO wherein the EP failed to report the periods of defaults in repayment of loans or borrowings to financial institutions, banks, government, or dues to debenture holders.
68. Responding to these charges, the EP in his written reply stated that in accordance with the division of the work the “Loan in all respect” was the responsibility of the other Joint Auditor.
69. Considering the reply of the EP the charge stands dropped.
E. ARTICLES OF CHARGES OF PROFESSIONAL MISCONDUCT
70. Given the above-mentioned actions and omissions, it is established that CA Pankaj Kumar, EP showed gross negligence and lack of due diligence. The EP has been found to be grossly negligent in professional duties by not adhering to the requirements laid down by the Companies Act, 2013 and relevant Standards on Auditing. This has led to the issuance of an audit report not backed by valid audit evidence and the absence of quality in the audit work. Specifically, the following failures on the part of CA Pankaj Kumar, EP as contained under the Articles of Charges in the SCN are established:
a) CA Pankaj Kumar committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 5 of Part I of the Second Schedule of the Chartered Accountants Act,1949 (no. 38 of 1949) as amended from time to time, which states that an EP is guilty of professional misconduct when he ‘fail to disclose a material fact known to them which is not disclosed in a financial statement, but disclosure of which is necessary in making such financial statement where he is concerned with that financial statement in a professional capacity”
This charge is proved as the EP failed to disclose in their report the material non-compliances the company made as explained in C and D above (except for the dropped charges).
b) CA Pankaj Kumar committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 6 of Part I of the Second Schedule of the Chartered Accountants Act,1949 (no. 38 of 1949) as amended from time to time, which states that an EP is guilty of professional misconduct when he, ” Fail to report a material misstatement known to him to appear in a financial statement with which he is concerned in a professional capacity”.
This charge is proved as the EP failed to disclose in his report the material misstatement the company made as explained C and D above (except for the dropped charges).
c) CA Pankaj Kumar committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 7 of Part I of the Second Schedule of the Chartered Accountants Act,1949 (no. 38 of 1949) as amended from time to time, which states that an EP is guilty of professional misconduct when he, “does not exercise due diligence, and being grossly negligent in the conduct of professional duties”.
This charge is proved as the EP failed to conduct the audit in accordance with the SAs and applicable regulation, failed to report the material misstatements in the Financial Statement and failed to report non-compliance made by company, as explained C and D above (except for the dropped charges).
d) CA Pankaj Kumar committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 8 of Part I of the Second Schedule of the Chartered Accountants Act,1949 (no. 38 of 1949) as amended from time to time, which states that an EP is guilty of professional misconduct when he, “Fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion”.
This charge is proved as the EP failed to conduct the audit in accordance with the SAs and applicable regulation, as well as due to their total failure to report the material misstatements and non-compliances made by the company in the Financial Statements, as explained in C and D above (except for the dropped charges).
e) CA Pankaj Kumar committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 9 of Part I of the Second Schedule of the Chartered Accountants Act,1949 (no. 38 of 1949) as amended from time to time, which states that an EP is guilty of professional misconduct when he, “Fails to invite attention to material departure from the generally accepted procedures of audit applicable to the circumstances”,
This charge is proved as the EP failed to conduct the audit in accordance with the SAs and applicable regulation as explained in C and D above (except for the dropped charges).
71. Thus, EP Pankaj Kumar committed professional misconduct, as defined in the respective clauses of the Chartered Accountants Act, 1949, the meaning of which is conceived under Section 132 (4) of the Companies Act as amounting to professional misconduct.
F. PENALTY and SANCTIONS
72. The seriousness with which proved cases of professional misconduct are viewed is evident from the fact that a minimum punishment is laid down by the law.
73. Independent Auditors of Publicly Listed Companies are expected to demonstrate sufficiency and appropriateness of audit work in every aspect of the critical building blocks of an audit of financial statements of PIE. Failure of the auditor to meet the requirements envisaged under the Law and contemporary professional Standards on Auditing has been the hallmark of this audit engagement performed by the EP.
74. As is set out in this order, the manner in which the audit was conducted, failed to meet the requirements of the SAs, the Act and the Code of Ethics in a number of significant aspects which demonstrated a serious lack of competence on the part of the EP. The dismal state of quality of audit performance in this engagement can be gauged from the failure of the EP to critically assess the abnormal state of affairs of the Company and its financial condition indicating existence of fraudulent transactions/activities in the company, and gross negligence towards adherence to mandatory SAs in the preparation of audit working papers.
75. As detailed in this order, substantial deficiencies in audit, the abdication of responsibility and inappropriate conclusions on the part of EP, CA Pankaj Kumar, establishes his professional misconduct. In addition, CA Pankaj Kumar has tried to mislead NFRA by giving evasive replies and falsified documents. Despite being a qualified professional, CA Pankaj Kumar has not adhered to the Standards and has thus, not discharged the duty cast upon him as an ethical auditor entrusted with critical role of a watchdog in public interest.
76. We have also explained above that CA Pankaj Kumar lacks the level of knowledge, competence, skill, and the application that is normally expected from such a professional. Under the circumstances, we proceed to impose sanctions on the EP, CA Pankaj Kumar, keeping in mind deterrence, proportionality, and the signalling value of sanctions.
77. Section 132(4)(c) of the Companies Act 2013 provides that National Financial Reporting Authority shall, where professional or other misconduct is proved, have the power to make order for—
A) imposing penalty of— (I) not less than one lakh rupees, but which may extend to five times of the fees received, in case of individuals; and (II) not less than ten lakh rupees, but which may extend to ten times of the fees received, in case of firms.
B) debarring the member or the firm from—(I) 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; or (II) performing any valuation as provided under section 247, for a minimum period of six months or such higher period not exceeding ten years as may be determined by the National Financial Reporting Authority.
78. As per information furnished by M/s SVP & Associates vide e-mail dated 31.08.2022, the statutory audit fees of SRS Ltd for 2017-18 was 6.50 lacs. Considering the fact that professional misconduct have been proved and considering the nature of violations and principles of proportionality, we, in the exercise of powers under Section 132(4) of the Companies Act, 2013, order:
a) Imposition of a monetary penalty of 300,000/- (Rupees Three Lakhs) upon CA Pankaj Kumar.
b) In addition, CA Pankaj Kumar is debarred for 3 (Three) years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.
79. This order will become effective after 30 days from the date of issue of this order.
Sd/-
(Dr. Ajay Bhushan Prasad Pandey)
Chairperson
Sd/-
(Dr. Praveen Kumar Tiwari)
Full-Time Member
Sd/-
(Ms Smita Jhingran)
Full-Time Member
Authorised for issue by the National Financial Reporting Authority,
(Vidhu Sood)
Secretary
Date: 21 .04.2023
Place: New Delhi
To
CA Pankaj Kumar
ICAI Membership No-091822
SVP & Associates
1209 New Delhi House
27 Barakhamba Road
New Delhi – 110001
E-mail: svp1209@gmail.com, cavkco@gmail.com
Copy To: –
i. Secretary, Ministry of Corporate Affairs, Government of India, New Delhi.
ii. SFIO, New Delhi
iii. Securities and Exchange Board of India, Mumbai.
iv. Registrar of Companies, Mumbai.
v. Secretary, Institute of Chartered Accountants of India, New Delhi.
vi. IT-Team, NFRA for uploading the order on the website of NFRA.
Notes:-
1. Rule 3 of NFRA Rules, 2018
2. Standard on Auditing 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements (SA 240)
3. Standard on Auditing 530, Audit Sampling (SA 530)
4. Standard on Auditing 230, Audit Documentation (SA 230)
5. Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.
6. Those Charged with Governance (TCWG) — refer para 6(a) of Standard on Auditing 260, Communication with Those Charged with Governance (SA 260)
7. KPMG Assurance and Consulting Services LLP and Sagar Pravin Lakhani (Dec 2022), KPMG Singapore- Tan Joon Wei (2021), Deloitte LLP Canada (2021), BDO-Mexico (2019), Deloitte Brazil (2016)
8. Standard on Auditing 570, Going Concern (SA 570)
9. Code of Ethics 2009, issued by ICAI
10. Standard on Auditing 300, Planning an Audit of Financial Statements (SA 300)
11. Standard on Auditing 320, Materiality in Planning and Performing an Audit (SA 320)
12. Internal Control over Financial Reporting (ICFRR, Auditor’s additional reporting requirement under section 143 (3)(i) of the Act
13. Standard on Auditing 220, Quality Control for an Audit of Financial Statements (SA 220)
14. Section 143 (9): Powers and duties of auditors and auditing standards.
15. International Standard on Auditing (ISA) issued by the IAASB
16. International Auditing and Assurance Standards Board (IAASB)
17. Standard on Auditing 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing (SA 200)
18. Standard on Auditing 500, Audit Evidence (SA 500)
