NFRA Issues Inspection Reports of Six Audit Firms, Affiliates

The National Financial Reporting Authority (NFRA) on Friday flagged certain shortcomings in inspection reports related to auditing works of six audit firms and their affiliates.

The inspection reports pertain to Deloitte Haskins & Sells & Affiliates, Walker Chandiok & Co LLP, Umamaheswara Rao & Co, B D G & CO LLP, Singhi & Co and CNK & Associates LLP.

In the report on Deloitte Haskins & Sells & Affiliates, NFRA said audit firms' Non-Audit Service (NAS) Policy applies only to Deloitte India entities, lacking safeguards against prohibited NAS by non-India network firms to Indian clients' group entities.

It has also made observations related to the individual audit engagements.

Among the issues, NFRA, in the inspection report on Walker Chandiok & Co LLP, said there was a need for systemic improvement to ensure an independence declaration by every team member and its documentation in the audit tool, before signing off on the engagement.

"The firm's monitoring process exhibited a lack of formal and documented communication of deficiencies identified during Internal Quality Control Reviews (IQCR) to the respective engagement partners," the report said.

Regarding Umamaheswara Rao & Co, the watchdog's inspection report mentioned certain aspects, including that the firm may strengthen its monitoring mechanism.

According to the regulator's report on B D G & CO LLP, certain aspects of SQC (Standard Quality Control) compliance require strengthening, and that improvements are also needed in documentation concerning client acceptance and continuance procedures, review of audit work and monitoring process, among other aspects.

About Singhi & Co, the NFRA report said the firm is required to implement measures for continuous monitoring of personal independence declarations made by the members of the firm towards their investments.

Other observations include the need to strengthen the firm's policy and practice of audit documentation needs to be further strengthened.

In the report on CNK & Associates LLP, the regulator mentioned various issues, including that the firm needs to strengthen its policies, procedures and controls relating to audit documentation, and that it has to strengthen the policy relating to engagement quality control review.

The audit quality inspections for these firms were initiated in 2025.