Deloitte Penalized Rs 2 Crore for Audit Failures in Zee

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The National Financial Reporting Authority (NFRA) has imposed a Rs 2 crore fine on Deloitte Haskins & Sells LLP for alleged lapses in auditing Zee Entertainment Enterprises Limited during the 2018-19 and 2019-20 financial years. The fine is part of an ongoing effort to hold auditors accountable for their role in corporate governance and financial reporting.

Deloitte Fined Rs 2 Crore for Audit Lapses in Zee; A Look at Other High-Profile Penalties
Deloitte Fined Rs 2 Crore for Audit Lapses in Zee; A Look at Other High-Profile Penalties

The National Financial Reporting Authority (NFRA) has imposed a Rs 2 crore fine on Deloitte Haskins & Sells LLP for alleged lapses in auditing Zee Entertainment Enterprises Limited during the 2018-19 and 2019-20 financial years. The fine is part of an ongoing effort to hold auditors accountable for their role in corporate governance and financial reporting.

Along with the fine imposed on Deloitte, two chartered accountants (CAs), AB Jani and Rakesh Sharma, who were responsible for overseeing the audit, have been penalized. Jani, who served as the Engagement Partner (EP), has been fined Rs 10 lakh and barred from performing audit work for the next five years. Sharma, the Engagement Quality Control Review (EQCR) Partner, has been fined Rs 5 lakh and barred for three years. The actions taken against Jani and Sharma highlight the serious consequences for auditors who fail to adhere to professional standards.

This case is not an isolated incident. Deloitte has faced scrutiny for audit lapses across the globe, with several high-profile cases resulting in substantial fines. Here is a look at some of the other notable penalties Deloitte has faced in recent years:

In April 2023, the Public Company Accounting Oversight Board (PCAOB) fined Deloitte Indonesia and Deloitte Philippines a total of $2 million in connection with a cheating scandal involving exam answers. The PCAOB discovered that between 2017 and 2019, audit partners and personnel from Deloitte Philippines were involved in widespread answer sharing during internal exams. Similarly, more than 200 Deloitte professionals in Indonesia engaged in answer sharing from 2021 to 2023. While Deloitte did not admit to the violations, the firm agreed to pay $1 million each for the fines imposed on its Indonesian and Philippine operations.

In March 2023, China imposed a fine of 211.9 million yuan ($30.8 million) on Deloitte for failing to adequately assess the asset quality of China Huarong Asset Management Co Ltd. The Chinese government also suspended Deloitte’s Beijing operations for three months. The firm issued a statement expressing regret and accepting the ministry’s decision, acknowledging that certain aspects of its work fell below required auditing standards.

The UK’s Financial Reporting Council (FRC) fined Deloitte £900,000 ($1.14 million) in 2021 for its failure to properly audit SIG, a building materials firm. Additionally, the FRC imposed a £36,250 fine on Simon Manning, the engagement partner responsible for the audit. Deloitte’s original fine of £1.25 million was reduced after the company admitted to the breaches.

In September 2020, Deloitte was handed a record £15 million fine and reprimanded for its failures in auditing the software company Autonomy between 2009 and 2011. The audit was criticized for not identifying the financial misstatements that led to one of the largest corporate scandals in the UK. Two former Deloitte partners involved in the audits, Richard Knights and Nigel Mercer, were also fined and sanctioned by the FRC.

Deloitte’s repeated lapses in auditing have raised concerns about the firm’s ability to maintain the trust and confidence of regulators, investors, and the public. The company’s involvement in multiple high-profile scandals underscores the need for rigorous oversight of the auditing industry to prevent such lapses from recurring in the future.

The Rs 2 crore fine imposed on Deloitte for its audit of Zee Entertainment serves as a reminder of the growing scrutiny faced by auditors. As the firm continues to grapple with the consequences of its actions, the financial industry and regulators alike will be watching closely to ensure that Deloitte upholds the highest standards of professionalism in the future.

With increasing penalties, such cases highlight the importance of transparency, diligence, and accountability in the audit profession.

Sources By Agencies

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