Mumbai: Top auditors Deloitte Haskin and Sells, and BSR and Co. could find themselves shut out of work for five years, with the government asking the National Company Law Tribunal (NCLT) to bar them for alleged lapses in auditing the books of IL&FS Financial Services Ltd (IFIN).In a petition filed before the Mumbai bench of NCLT on Monday, the ministry of corporate affairs (MCA) sought the prosecution of the two audit firms and the appointment of a new auditor for IFIN. This follows the Serious Fraud and Investigation Office (SFIO) filing charges against the two firms on 30 May.The auditors have been charged with concealing information by not raising alerts on the misstatements in IFIN’s accounts. The charge sheet also pointed to evergreening in IFIN’s accounts and said the auditors colluded with the company’s management.Deloitte, which started auditing IFIN in 2008, left in 2018 as rules mandate changing auditors every 10 years. This is when BSR, a KPMG affiliate, stepped in. In 2017-18, Deloitte and BSR did a parallel audit of IFIN.If the auditors are indeed barred, 276 companies listed on the National Stock Exchange of India (NSE) will need to look for new auditors. While KPMG affiliates audit 150 NSE-listed companies, Deloitte audits 126, according to Prime Database.The MCA petition named the audit firms and nine individual auditors for prosecution under Section 140(5) of the Companies Act for negligence and lapses in the audit of IFIN that can lead to a prohibition on auditing companies for a period of five years.“An auditor against whom final order has been passed by the Tribunal under this section shall not be eligible to be appointed as an auditor of any company for a period of five years from the date of passing of the order and the auditor shall also be liable for action under Section 447,” reads the Companies Act.Section 447 pertains to fraud that can lead to imprisonment and a penalty nearly 10 times the size of the fraud if upheld by the special court, which rules on charges filed by SFIO.A spokesperson for Deloitte said it continues to stand by its audit and finds the MCA action unfortunate. “DHS Llp is confident that it has not failed or been negligent in its duties. The firm stands by its audit work, which has been performed in accordance with professional standards in India, as well as applicable laws and regulations,” the spokesperson said. “DHS Llp has faith in the judicial processes and looks forward to presenting its position, which will be supported by facts, to the courts and other relevant authorities.”A spokesperson for BSR said the auditor is aware of the MCA petition and is studying it. “BSR’s audit of IFIN was performed in accordance with the applicable auditing standards and legal framework. We will defend our position in accordance with the law, and are confident that the judicial process will confirm BSR’s position. BSR is committed to audit quality and the highest ethical standards and does not shirk from that responsibility,” said the spokesperson.The Big Four auditors have recently faced regulatory ire due to lapses in their audit practices. On 3 June, the Reserve Bank of India barred audit firm S.R. Batliboi and Co. Llp, a member firm of EY, from auditing commercial banks for a year starting 1 April 2019, citing lapses in a statutory audit.