Anil Ambani Group Companies Auditor Banned By NFRA

The National Financial Reporting Authority(NFRA) has banned the auditors of Anil Ambani group companies Reliance Home Finance and Reliance Commercial Finance and has also levied a penalty for the irregularities in their accounts for the 2018-19 period. 

Reliance Home Finance Auditors

Dhiraj and Dheerak, The Auditors of Anil Ambani Group company, Reliance Home Finance have been fined Rs.1 crore, and the chartered accountants at the firm Piyush Patni and Pawan Kumar Gupta have also been penalized by barring them from taking on audit assignments for 3-5 years. The stock of Reliance Home Finance is at its lower circuit price of Rs.3.60 per share today.

Reliance Commercial Finance

Anil Ambani group company, Reliance Commercial Finance’s auditor, Shridhar & Associates, has faced significant penalties, with a Rs.2 crore fine imposed on the firm. Additionally, engagement partner Ajay Vastani has been barred from practice for five years and is also fined Rs.50 lakh. The disciplinary action was extended with the resignation of Price Waterhouse (PW) as the auditor, suspected of potential fraud in the financial dealings of the company. 

An investigation revealed that Ajay Vastani was guilty of accepting the audit engagement without prior communication with Price Waterhouse (PW), which has deviated from established firm policies. This serious oversight has highlighted the importance of maintaining strict adherence to auditing protocols to ensure transparency and trust in financial reporting. This comes after Reliance Capital, another company of the group had faced similar action last month.

Conclusion: The penalties imposed on Anil Ambani Group auditors, Shridhar & Associates and Dhiraj & Dheerak, along with their respective partners, highlight the stringent measures regulatory bodies are willing to take to uphold the integrity of financial reporting. Similarly, the Rs 1 crore fine on Dhiraj & Dheerak, and the sanctions on Piyush Patni and Pawan Kumar Gupta, tell us the serious consequences one can face by issuing an unreliable audit report. The NFRA’s emphasis on the need for adherence to accounting standards and the issuance of appropriate audit opinions shows as a perfect reminder to auditing firms about their critical role in ensuring transparency and trust in financial markets. These actions are a clear message that deviations from ethical and professional standards are not going to be tolerated.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.