Ministry of Corporate Affairs is reportedly considering to ban Deloitte India for 5 years.
If reports are to be believed Ministry of Corporate Affairs may invoke section 140 (5) of the Companies Act to debar the firm for alleged malpractice in IL&FS accounts.
What Section 140 (5) of The Companies Act States
Without prejudice to any action under the provisions of this Act or any other law for the time being in force, the Tribunal either suo motu or on an application made to it by the Central Government or by any person concerned, if it is satisfied that the auditor of a company has, whether directly or indirectly, acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, it may, by order, direct the company to change its auditors.
So, in case this were to happen it would be second such instance since PriceWaterhouseCoopers which was nailed in the Satyam scam.
Replying to the charges a spokesperson for Deloitte said, “The investigations on the company IFIN are in progress and we are cooperating fully. We reaffirm that we have conducted our audits in accordance with the standards on auditing and applicable laws and regulations.”
The firm didn’t audit the group when the defaults started in May 2018, Deloitte maintained. IL&FS, IL&FS Transportation Networks Limited (ITNL) and IL&FS Financial Services Limited (IFIN) were being audited by others firms, it added.