The National Financial Reporting Authority (NFRA), the country’s sole independent audit regulator, has debarred chartered accountant Gulshan Jagdish Jham for a year from being appointed as an auditor or internal auditor of any company or body corporate.

It has also imposed a penalty of ₹1 lakh upon Jham, who as a proprietary concern was auditor of the listed entity Prabhu Steel Industries Ltd (PSIL) for FY20. This punishment will become effective after 30 days from June 21, the date of issue of the NFRA order.

This is the first instance where punishment has been meted out to a CA and a monetary penalty has been imposed after the new NFRA Chairman, Ajay Bhushan Pandey, assumed office in March this year, sources said. It maybe recalled that NFRA had, in mid-February this year, issued a financial review quality review report (FRQRR) on PSIL.

Non-compliance with Ind AS

In its latest order imposing sanctions on Jham, NFRA said the action has been taken for his professional misconduct in his performance of statutory auditor of PSIL. PSIL is listed on the Bombay Stock Exchange (as of March 31, 2020).

NFRA has observed in the FRQRR that PSIL had not complied with Ind AS reporting framework and applicable provisions of the Companies Act, 2013, in the preparation and presentation of financial statements. This had resulted in a significant misstatement of almost all the figures and disclosures made in the financial statements for the year 2019-20, NFRA said.