NFRA Imposes Rs 2 Crore Penalty on Deloitte Haskins for Audit Failures in ZEEL Case
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New Delhi, Dec 24 (NationPress) The National Financial Reporting Authority (NFRA) has imposed a penalty of Rs 2 crore on Deloitte Haskins & Sells LLP, along with two chartered accountants, due to alleged deficiencies in the auditing of Zee Entertainment Enterprises Ltd (ZEEL).
The fine of Rs 2 crore is associated with the audit lapses for the financial years 2018-19 and 2019-20.
Chartered accountant AB Jani, who served as the Engagement Partner (EP) during the audit, has been fined Rs 10 lakh and reportedly barred from conducting any audit work for 5 years. Rakesh Sharma, the Engagement Quality Control Review (EQCR) Partner, has been fined Rs 5 lakh and debarred for 3 years.
The financial regulator indicated that, prima facie, the auditors did not fulfill their professional responsibilities under the Companies Act and the Standards on Auditing (SA).
A spokesperson for Deloitte stated that they have received the NFRA order against the firm and two retired partners, and are currently assessing the order to formulate their subsequent actions.
NFRA's investigation indicated that the auditors were grossly negligent, failing to exhibit professional scepticism and due diligence.
They did not sufficiently question the management's claims and neglected to investigate reports of suspected fraud, according to the NFRA findings.
In August of this year, ZEEL and Culver Max Entertainment Pvt. Ltd. (CMEPL), operating as Sony Pictures Networks India (SPNI), along with its group company Bangla Entertainment Pvt. Ltd. (BEPL), reached a comprehensive non-cash settlement, amicably resolving all disputes concerning the merger cooperation agreement and the composite scheme of arrangement.
Earlier in January, Sony Pictures Networks India (SPNI) cancelled a planned $10 billion merger deal with Zee Entertainment, nullifying a December 2021 agreement. Sony also requested a $90 million termination fee due to alleged breaches of the merger agreement by Zee Entertainment.
Zee likewise sought a $90 million termination fee from SPNI and its entity Bangla Entertainment Pvt. Ltd. (BEPL) on May 23 for withdrawing from the $10 billion merger.
