NFRA Cracks Down on Deloitte and Auditors Over ZEEL Audit Lapses

The NFRA has fined Deloitte Haskins & Sells LLP Rs 2 crore and imposed penalties on two auditors for failing in their audit duties for Zee Entertainment Enterprises Ltd during 2018-2020. The auditors have been barred from undertaking audit work for 5 and 3 years respectively, for misconduct.

The National Financial Reporting Authority (NFRA) has levied a significant fine of Rs 2 crore on Deloitte Haskins & Sells LLP for their involvement in auditing discrepancies at Zee Entertainment Enterprises Ltd (ZEEL) during the 2018-2019 and 2019-2020 financial periods. Furthermore, penalties were also imposed on two chartered accountants involved in the audit.

Auditors A B Jani and Rakesh Sharma faced fines of Rs 10 lakh and Rs 5 lakh respectively and were barred from conducting any audit work—Jani for five years, and Sharma for three years. These sanctions arose from their respective roles as Engagement Partner (EP) and Engagement Quality Control Review (EQCR) Partner during the audit.

The NFRA's thorough examination concluded that both Deloitte and the auditors failed to adhere to the Companies Act and Standards on Auditing, specifically regarding crucial related party transactions. Their lack of professional skepticism and due diligence was evidenced by their inability to report unauthorized financial activities involving ZEEL's fixed deposits and loans.

(With inputs from agencies.)