RBI Bans Haribhakti & Co From Undertaking Audits For Two Years

New Delhi: The Reserve Bank of India (RBI) on Tuesday said it has debarred chartered accounting firm Haribhakti & Co from undertaking any type of audit assignments in any of the entities regulated by the central bank. The ban will be imposed for a period of two years with effect from April 1, 2022.

"The Reserve Bank in 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 a period of two years with effect from April 1, 2022," it stated in a notification.

The step has been taken "on account of the failure on the part of the audit firm to comply with a specific direction issued by the central bank with respect to its statutory audit of a Systemically Important Non-Banking Financial Company," the RBI added.

However, the Reserve Bank mentioned that the order "will not impact audit assignments of Haribhakti & Co for the financial year 2021-22 (FY22)."

This is the first debarment done since the RBI put in place a framework to take action against erring auditors for lapses during audits in 2018.

The RBI 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 following instructions will be met with punitive actions such as debarring them from conducting business with banks.

The new framework aims to improve quality and bring a transparency mechanism to examine accountability of SAs in consistent manner.