The Reserve Bank of India (RBI), on Tuesday, announced that it has disqualified chartered accounting firm Haribhakti & Co from undertaking any type of audit assignments in any of the entities regulated by the central bank. RBI, on Tuesday, announced a ban on the CA firm for two years, effective from April 1, 2022.
“The Reserve Bank in the exercise of the powers vested under section 45MAA of the Reserve Bank of India Act, 1934, has, by an order dated September 23, 2021, debarred M/s Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 103523W / W100048), from undertaking any type of audit assignment/s in any of the entities regulated by RBI for two years with effect from April 1, 2022,” read RBI notification.
RBI had to impose a ban since the audit firm failed to comply with a specific direction issued by the apex bank concerning its statutory audit of a Systemically Important Non-Banking Financial Company.
However, RBI emphasised that the ban will not impact “the audit assignments of Haribhakti & Co for the financial year 2021-22 (FY22).”
This is the first debarment since the RBI established a mechanism in 2018 to take action against erring auditors for audit failures.
The apex bank in its circular titled ‘Enforcement action framework in respect of statutory auditors for lapses in statutory audit of commercial banks” had warned that any SA not adhering with the instruction will have to face punitive actions such as debarment from conducting business with banks.
The new approach seeks to raise quality and provide a transparent process for consistently assessing SA responsibility.