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CA firm Haribhakti & Co debarment: ICAI seeks details from RBI

K.R.Srivats New Delhi | Updated on October 13, 2021

Nihar Jambusaria, President, ICAI

May proceed with disciplinary action from its end based on information provided by RBI

The CA Institute has written to the Reserve Bank of India seeking details of the case related to the action taken by the central bank against Haribhakti & Co LLP, a firm of chartered accountants.

The RBI had on Tuesday announced that it had barred Haribhakti & Co LLP from undertaking any type of audit assignment in any of the entities regulated by the central bank for two years with effect from April 1, 2022.

Also see: Revision of 18 accounting standards: ICAI to ask NFRA to withdraw RIA demand

“Our disciplinary committee has written to the RBI on this today. We need information on various aspects including the nature of misconduct etc. Based on the response, we will take a call on whether we should also proceed with any disciplinary action from our end or not,”Nihar Jambusaria, President, Institute of Chartered Accountants of India, told BusinessLine.

One has to look into the details to determine whether CA Institute has jurisdiction in the matter or not, he said.

If the systemically important NBFC were to be a listed entity, then ICAI cannot do anything about the auditor as the jurisdiction now falls under recently created National Financial Reporting Authority (NFRA), sources said.

Failure to comply

The RBI had taken action against Haribhakti & Co LLP for its failure to comply with a specific direction issued by RBI with respect to statutory audit of a systemically important non banking finance company. This was the first case of debarment of a CA firm under Section 45MAA of the Reserve Bank of India Act 1934. This provision empowered RBI to take action against an erring auditor.

Although RBI did not name the NBFC, it is widely perceived that the NBFC in question is Srei Infrastructure Finance, whose Board was superseded by the central bank recently. The RBI had also superseded the Board of Srei Equipment Finance.

Published on October 13, 2021

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