NFRA Imposed Rs.1 Cr penalty on Auditor of Cafe Coffee Day Group
The National Financial Reporting Authority (NFRA) has imposed a ban as well as penalties totalling Rs. 1.25 crore on five entities, including four auditors, for lapses in auditing of Coffee Day Global Ltd and MACEL during 2018-19 fiscal. Coffee Day Global Ltd (CDGL) and Mysore Amalgamated Coffee Estate Ltd (MACEL) are subsidiaries of listed-entity Coffee Day Enterprises Ltd (CDEL). The case pertains to diversion of funds worth Rs. 3,535 crore from seven subsidiary companies of CDEL to MACEL. Late V.G. Siddhartha and his family members controlled and owned CDEL.
NFRA has imposed a fine of Rs. 5 lakh and slapped a five-year ban on Lavitha Shetty, who was the statutory auditor for MACEL during 2018-19 period. In connection with CDGL, the audit regulator has slapped a fine of Rs. 1 crore on audit firm ASRMP & Co, Rs. 10 lakh on A S Sundaresha and Rs. 5 lakh each on Madhusudan U A and Pranaav G Ambekar.
As per the order, the company's auditors failed to exercise professional judgement and skepticism during audit of the transactions of Rs. 6,958.91 crore entered fraudulently with MACEL, which were also not disclosed in the related party disclosures in their entirety. And also, All of them have been restrained from undertaking any audit in respect of financial statements or internal audit of any company or body corporate during the ban period.
