The Reserve Bank of India (RBI) on Monday said it has barred audit firm S.R.Batliboi & Co. Llp, a member firm of EY, from auditing commercial banks for a year starting 1 April 2019, citing lapses in a statutory audit.
RBI did not specify the name of the audited entity.
“On account of the lapses identified in a statutory audit assignment carried out by the firm, M/s S.R. Batliboi & Co. Llp., chartered accountants, it has been decided that RBI will not approve the said firm for carrying out statutory audit assignments in commercial banks for one year starting from April 1, 2019," the regulator said.
The central bank added that the action taken in the matter has been communicated to the Institute of Chartered Accountants of India (ICAI). The big four global consulting and accounting firms are present in India through their network firms.
S.R. Batliboi is EY’s network company performing the audit function in India, Deloitte Haskins & Sells Llp is part of Deloitte’s network, BSR & Co. Llp is part of KPMG’s network and PriceWaterhouse is part of PwC’s network.
The central bank’s action is based on its enforcement framework released in June last year for statutory auditors for lapses in audit of commercial banks.
In the interest of improving audit quality and with a view to instituting a transparent mechanism to examine accountability of statutory auditors in a consistent manner, the regulator had decided to put in place a graded enforcement action framework to enable appropriate action by RBI.
“The framework would cover, inter alia, instances of divergence identified in asset classification and provisioning during the RBI inspection vis-à-vis the audited financial statements of banks above the threshold specified," RBI had said last year.
"We have learnt of this development from the press release issued by RBI and are not aware of further details. Accordingly, we will be unable to comment further at this stage," S.R.Batliboi & Co said in a statement.