The National Financial Reporting Authority (NFRA) has fined Deloitte for alleged deficiencies in its audit of ZEEL

The National Financial Reporting Authority (NFRA) has imposed penalties on Deloitte Haskins & Sells LLP and two of its senior partners for alleged professional misconduct in auditing Zee Entertainment Enterprises Limited (ZEEL) for FY2018-19

and FY2019-20. The regulator has levied a total fine of ₹2.15 crore and issued multi-year debarments to the involved partners. According to the NFRA’s order, published on December 23, the audit firm was fined ₹2 crore.

The audit engagement partner has been fined ₹10 lakh and banned from practicing for five years, while the audit quality control partner, who is debarred for three years, has been fined ₹5 lakh. Both partners are now retired from Deloitte.

The NFRA also instructed Deloitte to revisit the audit reports.

This action follows allegations that Deloitte failed to identify and report irregularities regarding a ₹200-crore fixed deposit held by ZEEL in Yes Bank. The FD was prematurely closed in July 2019 and used by the bank to settle debts of seven promoter-linked entities of ZEEL, without board or shareholder approval, according to the NFRA’s order.

The NFRA, an independent regulator of statutory auditors established under the Companies Act, is headed by Ajay Bhushan Pandey, the former Finance Secretary of India. The authority also includes two other full-time members, Praveen Kumar Tiwari and Smita Jhingran.