In the 2023 judgment, the NCLAT had dismissed a batch of appeals by four Chartered Accountants (CAs) who had challenged penalties imposed on them by the NFRA for lapses in conducting branch audits for Dewan Housing Finance Ltd (DHFL) at seventeen of the public company’s branches.
The NFRA had found that the four CAs had failed to adhere to various auditing standards and that they had accepted their engagement to conduct the branch audit without complying with legal requirements under the Companies Act, 2013.
As penalty, the four branch auditors were asked to pay ₹1 lakh fine and debarred from performing audit functions for a year. The four orders passed by the NFRA against these auditors were then challenged by the affected CAs before the NCLAT.
The accountants had argued that the NFRA lacked retrospective powers to investigate the matter, since the alleged misconduct occurred in 2017-18, which was before the NFRA’s constitution in October 2018.
Source: Barandbench
