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It is a brutal and scathing indictment, once again confirming stories on this issue but perhaps more than that, arguing vehemently on the complicit nature of auditors and their crony relationship with corporates, selling themselves for a few pieces of silver. Greed never had it so good, but finally the law seems to have caught up with them.The Regional Director, Western Region, has now been authorised to initiate proceedings under Section 140 (5) of Companies Act, 2013 before the NCLT against auditors named in the report, namely Udayan Sen, Kalpesh Mehta, Sampath Ganesh, Shrenya Baid, Rakesh Kumar Jain, Nishit Dipak Udani, Anuj Rawat, Payal Mukeshbhai Rathod, A.P. Shah, AP Shah and Associates, Deloitte Haskins and Sells LLP, BSR and Associates LLP for their role in perpetuating the fraud and seek their debarment.The Regional Director has also been directed to include names of the above named auditors in the proceedings under sections 241 and 242 of Companies Act, 2013 pending before the NCLT and seek interim attachment of movable and immovable properties of all persons including lockers, bank accounts and jointly-held properties etc.Why has such a tough view been taken is primarily because the malaise was all pervasive with the auditors neck-deep in the conspiracy.The contours of the investigations have revealed that auditors, along with their engagement team of IFIN (A 10-14, 24-30) did not perform their duties diligently. The auditors, despite having the knowledge of funding of the defaulting borrowers for principal and interest payments, which was prejudicial to the interest of the company and its creditors, besides having awareness of the impact of the same on the financial statements, failed to report it in the auditors' report for FY 2013-14 to 2017-18. This was non-compliance of Section 143(1)(a) of the Companies Act.The loans which were transferred by mere book entry had resulted in considering the old loans as closed and new loans didn't require provisioning etc. This was an effort to postpone the provisioning, recognition of NPAs etc. Hence, assignment of the same was prejudicial to the interest of the company. The auditors having knowledge of the same had not reported the same in the audit report. This was non-compliance of Section 143(1)(b)).Udayan Sen (accused 10) and N. Sampath Ganesh (A12) had stated about reliance on RBI Inspection Report for NPA matters, the Review Report of Khandelwal Jain & Co, Chartered Accountants etc, availability of collateral and management representation on exit plan, rather than stating whether they had obtained the details necessary for the purpose of their audit or not.The auditors had relied on the oral discussion of the company officials with the RBI for reporting the NOF and CRAR as per the existing policy of the company, rather than RBI guidelines in FY 2017-18 and not disclosed this material departure from regulatory requirements and thus caused loss to the creditors of IFIN. This was non-compliance of section 143(3)(a) of the Act.By recognizing the interest income, which was funded by the IFIN itself, it had not followed accounting standard 9.As the company had not written of the loss investments, it had violated accounting standard 13. This was non-compliance of Section 143(3)(e) of the Companies Act.The investigation revealed that the auditors, along with their engagement team, had not followed the following auditing standards while auditing the financial statements of the company for FY 2014-15 to FY 2017-18 as under :* SA 500: "Audit Evidence" is dealt in the section "Reliance On Management Appointed Professionals" and "Audit Evidence and forming an opinion on true and fair view of Financial statements" above.* SA 240 (Revised): "The Auditor's Responsibility to consider Fraud and Error in an Audit of Financial Statements" is dealt in the "Audit of Lending".* SA 520 (Revised): "Analytical Procedures" is dealt in the section "Analytical procedures" under "Audit of Lending by DHS for last 10 FYs" and "Auditing of Lending by BSR for FY 2017-18".* SA 315: "Identifying and Assessing the Risk of Material Misstatement through Understanding the Entity and Its Environment", is dealt in the section "Assessing the Environment of the entity" under "Audit of Lending by DHS for last 10 FYs" and "Auditing of Lending by BSR for FY 2017-18".* SA 250: "Consideration of Laws and Regulations in an Audit of Financial Statements" is dealt in the section "Failure to Consider The Laws And Regulations Of The Auditee".* SA 570: "Going Concern" is dealt in the section "Auditors Responsibility under Standards of Auditing in Auditing in the Light of RBI Inspection".Finally, it was observed that above mentioned auditors, along with their engagement team, did not use professional scepticism to ensure true and fair disclosure of state of affairs of the companies. They, in fact, colluded with officials of the companies in order to conceal their fraudulent activities and thus, they had failed to perform their duties as required from them under section 143 of the Companies Act, 2013.( With inputs from IANS )

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