Deloitte Head Banned For 7 Years from Audit over IL&FS Lapses

The National Financial Regulatory Authority (NFRA) has barred former Deloitte Haskins and Sells LLP chief Udayan Sen from auditing for seven years and imposed a monetary penalty of ?25 lakh for auditing lapses at Infrastructure Leasing & Financial Services Ltd (IL&FS). Sen was the engagement partner of IL&FS in 2017-18. He stepped down as CEO in March 2015 and retired as a partner of the firm in March this year. He was found guilty of professional misconduct and not maintaining independence and quality in auditing accounts of the financial company. The order is effective post 31 July. Sen e failed to disclose material facts in financial statements known to him, failed to report material misstatement in IL&FS accounts, and did not exercise due-diligence and for gross negligence. The most damaging finding of NFRA is with respect to loss of independence of statutory auditor. NFRA observed that there was a serious lapse in the discharge of duty by Sen. Sen was issued a show cause notice in January by the audit watchdog for professional misconduct under section 132(4) of Companies Act 2013. Under this section, NFRA has the power to impose a monetary penalty and bar a firm from both internal and external audit. NFRA passed this order despite Sen’s writ petition pending in the Delhi high court. Sen had approached the court questioning NFRA’s jurisdiction. The high court on 26 June had ruled that the watchdog cannot give effect to its ruling till 31 July.