NFRA finds gaps in controls at Indian arms of audit companies

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RegExp("[?&]notifications=1(&|#|$)");"desktop"===h&&i&&b.test(window.location.search)&&(i.checked=!0)};ge("ybar-mod-notification",(function(e){var t={isUH3:"crunch"===e.getConfig().ytheme,notifContainer:document.getElementById("notification-container"),notifBadge:document.getElementById("notif-badge"),notifMenu:document.getElementById("ybarNotificationMenu"),notifMenuOpener:document.querySelector("#ybarNotificationMenu + label"),notifDropdown:document.getElementById("notifDropdownContainer"),tooltipContainer:document.querySelector(".".concat(no)),notifLabel:document.querySelector(".".concat(oo))};t.notifDropdown&&mo(e,t)}))}()}};]]>ADVERTISEMENTEllichipuram UmeshTue, March 17, 2026 at 4:14 PM GMT+1 2 min readIndia’s National Financial Reporting Authority (NFRA) has found a series of "deficiencies" in the work of audit companies linked to BDO, EY, KPMG and PwC.The findings were detailed in inspection reports released on 16 March, the Economic Times reported.The NFRA singled out shortcomings in key areas such as audit independence, internal governance and scrutiny of related-party transactions.For PwC-affiliated companies, the NFRA raised concerns about the independence of six partners. It also pointed to issues in recruitment-related human resources policies.During file reviews, the watchdog reported irregularities in audit work on investments held for sale and in impairment assessments. It also noted insufficient evaluation of whether loans to subsidiaries were on an arm’s length basis.The NFRA added that some controls over other expenses and related payments were not supported by adequate documentation.In its review of MSKA & Associates, a BDO affiliate, the NFRA said the company must tighten network-wide controls on non-audit services and require the engagement partner to re-sign any audit report that is modified after issuance.Further, the regulator said EY affiliate SRBC & Co needs stronger monitoring to ensure its firm-wide independence policies are effective and followed in practice.The NFRA stated that KPMG’s BSR Affiliates Network was largely in line with independence requirements and had addressed practice-wide quality control issues noted in prior inspections. However, it added that the company needs to tighten its policies on accepting non-audit work for recently audited clients and enhance its root cause analysis framework.The regulator said in a statement: “These inspections are a tool to provide audit firms with actionable regulatory feedback much earlier in the financial reporting cycle to help them enhance their quality control systems.“Overall inspections assist in the goals of strengthening overall financial market integrity and investor and creditor protection,” it added."NFRA finds gaps in controls at Indian arms of audit companies" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. 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