NFRA Slaps Hefty Penalties on Audit Firm BSR & Associates in Coffee Day Scandal

The National Financial Reporting Authority (NFRA) has imposed total penalties of Rs 10.75 crore on three entities, including BSR & Associates LLP. The audit firm faced penalties and debarment for lapses in auditing Coffee Day Enterprises for 2018-19, linked to the diversion of Rs 3,535 crore to MACEL.

The National Financial Reporting Authority (NFRA) has slapped penalties amounting to Rs 10.75 crore on three entities, including BSR & Associates LLP. The penalties also included barring them for varying periods for lapses in the audit of Coffee Day Enterprises for the financial year 2018-19.

The case revolves around the diversion of Rs 3,535 crore from seven subsidiary companies of Coffee Day Enterprises Ltd (CDEL) to Mysore Amalgamated Coffee Estate Ltd (MACEL), a subsidiary of CDEL. After markets watchdog Sebi shared its investigation regarding fund diversion, NFRA suo moto examined the professional conduct of CDEL's statutory auditors.

Following an investigation, NFRA issued showcause notices to BSR & Associates LLP, Aravind Maiya (Engagement Partner), and Amit Somani (Engagement Quality Control Reviewer) for the 2018-19 audit. The audit regulator imposed a penalty of Rs 10 crore on BSR & Associates LLP, Rs 50 lakh on Aravind Maiya, and Rs 25 lakh on Amit Somani.