Ex-deloitte head barred by NFRA

UDAYAN SEN HAS BEEN CHARGED A PENALTY OF ₹25 LAKH FOR THE FAULTY IL&FS AUDIT

MUMBAI: The National Financial Regulatory Authority (NFRA) on Wednesday barred Udayan Sen, a former India chief executive of Deloitte Haskins and Sells LLP, from auditing for seven years, for the company’s audit of bankrupt Infrastructure Leasing & Financial Services Ltd (IL&FS).

In its first order since it was set up in March 2018, the audit watchdog also imposed a penalty of ₹25 lakh on Sen, who was the audit firm’s engagement partner for IL&FS in 2017-18.

In its 88-page order, the NFRA termed Sen guilty of professional misconduct, and not maintaining independence and quality in auditing accounts of IL&FS. The order takes effect after July 31.

Sen stepped down as Deloitte’s India chief in March 2015 but continued to be a partner at the firm till his retirement in March this year.

The role of IL&FS’S two auditors—deloitte and KPMG affiliate BSR and Co.—came under the scanner after the financial conglomerate imploded in a debt crisis in September 2018, leaving a ₹1 lakh crore hole in the financial markets. The accounting watchhdfc dog issued a show-cause notice to Sen in January for professional misconduct under Section 132(4) of Companies Act 2013. Under this section, NFRA has the power to impose a monetary penalty and bar individuals or audit firms from internal and external audits.

The NFRA order comes even as a writ petition filed by Sen challenging its jurisdiction in the matter is pending in the Delhi high court. On June 26, the HC ruled that the watchdog cannot give effect to its ruling till July 31. NFRA’S most damaging observation is concerning the loss of independence of Deloitte as a statutory auditor. NFRA said there was a serious lapse in the discharge of duty by Sen.