After NFRA rap, SRBC & Co resigns as ITNL auditor
SRBC & Co LLP, part of EY India, has resigned as the auditor of IL&FS Transportation Networks Ltd ( ITNL). This comes after audit regulator National Financial Reporting Authority (NFRA) had found several audit failures on the part of SRBC & CO LLP in its statutory audit of the books of crisis-ridden ITNL.
“With respect to the report issued by NFRA on our audit of the financial statement of ITNL for the year ended March 31, 2018, we are examining remedies/options available to us and given the circumstances, it may be appropriate for us to avoid continuing as auditors of the company. As a result of such evaluation, we offered our resignation as the auditor of the company to allow the Board to continue The on-going audit work without any impediments,” SRBC & Co LLP said in a letter to ITNL on Tuesday.
Recently, NFRA had found several audit failures on the part of SRBC & CO LLP in its statutory audit of the books of crisis-ridden ITNL, a subsidiary of IL&FS, for the financial year 2017-18. The Audit Quality Review Report had highlighted at least nine major observations including the point that the initial appointment of SRBC & Co LLP, and the continuation of SRBC & Co LLP as statutory auditor of ITNL, was prima facie illegal and void.
Separately, SRBC & Co LLP had recently resigned as the auditor of IL&FS citing recent regulations issued by the Reserve Bank of India. In a bid to ensure the independence of bank auditors, the RBI issued guidelines for the appointment of statutory central auditors or statutory auditors in April this year. Under the norms, it made joint audits mandatory for entities with an asset size of ₹15,000 crore and above, capped the number of audits a firm can perform in a year at four banks, and eight NBFCs and urban cooperative banks, and reduced the tenure of auditors to three years.