Home Uncategorized SR Batliboi & Co gets one-year audit ban

SR Batliboi & Co gets one-year audit ban

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Regulatory noose tightening on Big firms too

MUMBAI: The leading chartered accountants, SR Batliboi & Co, the network firm representing the BIG Four member – Ernst & Young, has been barred by Reserve Bank of India (RBI) from performing bank audit function in the country for one year.

An official statement from the central bank said, “It has been decided that RBI will not approve the said firm for carrying out statutory audit assignments in commercial banks for one year starting from April 1, 2019. The action taken in the matter has been communicated to the Institute of Chartered Accountants of India (ICAI).”

It is not yet known which bank’s audit has dragged the E&Y affiliate to this disgrace. It has been a general practice that banks’ audit in India is mostly done by the Big Four affiliates.

It was about two weeks ago, the board of Infrastructure Leasing & Financial Services  (IL&FS) issued notices to Deloitte Haskins & Sells and KPMG’s audit partner BSR & Co, asking why they should not be removed for allegedly failing to highlight shortcomings while reviewing the books of its subsidiary IL&FS Financial Services
It may be recalled that RBI through an official statement dated June 29, 2018, had issued an enforcement action framework in respect of statutory auditors for the lapses in the statutory audit of commercial banks.

RBI reminded that statutory auditors (SAs) of banks play an important role in contributing to financial stability when they deliver quality bank audits which foster market confidence in banks’ financial statements.

It also noted that the quality of bank audits is also a valuable input in the supervisory process of the Reserve Bank of India (RBI) for commercial banks.

With a view to instituting a transparent mechanism to examine accountability of SAs in a consistent manner, RBI had decided to put in place a graded enforcement action framework to enable appropriate action in respect of the banks’ SAs for any lapses observed in conducting a bank’s statutory audit.

“The framework seeks to cover instances of divergence identified in asset classification and provisioning during the RBI inspection vis-à-vis the audited financial statements of banks above the threshold specified in the circular issued by RBI last year.

The big four global consulting and accounting firms are present in India through their network firms. SR Batliboi is EY’s network firm performing the audit function in India; whereas Deloitte Haskins and Sells is part of Deloitte’s network; BSR and Co is part of KPMG’s network and PriceWaterhouse part of PwC’s network.

 

 

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