NFRA had issued a show cause notice to Sen on January 17 asking why action should not be taken against him for professional misconduct in terms of his performance as the engagement partner in the statutory audit of IFIN in 2017-18. In response Sen had filed a writ petition in the High Court in February.
NFRA in its order found that the independence of the statutory auditor in mind and appearance had been totally compromised. NFRA’s order has accused Sen of intentional reckless behaviour. “CA Sen was not unaware of the requirements of the statutory auditors. He should have reasonably foreseen that the likely or actual consequences of his action would amount to non-compliance.”
NFRA also said that professional misconduct becomes very serious when the CA has gone along with the management of the company in agreeing to misstatements so as to commit a fraud on the users of the financial statement.
“In this case it is seen clearly that the company had actually incurred losses in the year 2017-18. It was only though such unacceptable stratagems as the imputation of a value of Rs 184 crore to thePut option on he TTSL shares that the actual incurred loss was turned into a reported profit.”
In its earlier report in this matter NFRA said that "the auditor did not display the required professional scepticism and accepted the management stand about not disclosing that net-owned funds and the capital to risk-assets ratio of IFIN as of March 31, 2018 were negative, and that this situation would lead to the cancellation of the company’s licence to operate as a non-banking financial company."
Haskins accepted the explanations of the management and certified these ratios as positive, it said.