ROC BANGALORE PENALIZES DELOITTE HASKINS & SELLS PARTNER FOR AUDIT LAPSES | AUDITOR ACCOUNTABILITY UNDER COMPANIES ACT, 2013

In a significant regulatory development, the Registrar of Companies (ROC), Karnataka (Bangalore) has imposed a penalty of ₹30,000 on Mr. Sathya P. Kaushik, Partner at Deloitte Haskins & Sells, in connection with the statutory audit of Stanly OEM Sofas Limited. The order was passed on 28 April 2025 for non-compliance with Section 143 of the Companies Act, 2013, which governs the duties and responsibilities of statutory auditors.

KEY AUDIT AND COMPLIANCE FAILURES IDENTIFIED BY ROC

The ROC order highlights serious lapses in statutory audit reporting, including:

•                Failure to disclose MSME interest liabilities, contrary to mandatory disclosure requirements

•                Non-reporting of related entities under Accounting Standard (AS) 18 – Related Party Disclosures

•                Related Party Transactions (RPTs) undertaken without requisite Board approval, in violation of the Companies Act, 2013 

Notably, the statutory audit report did not contain any adverse remarks, qualifications, or emphasis of matter, despite the existence of these material non-compliances.

REGULATORY SIGNIFICANCE AND INDUSTRY IMPACT

This enforcement action by ROC Bangalore reinforces the heightened regulatory scrutiny on statutory auditors, particularly concerning:

•                Auditor duties under Section 143 of the Companies Act, 2013

•                Accuracy and completeness of audit reports and disclosures

•                Auditor accountability in MSME compliance, related party transactions, and corporate governance

The order sends a strong message to audit firms and professionals that omissions, passive reporting, or failure to flag material non-compliances may attract personal penalties, even in the absence of fraudulent intent.

KEY TAKEAWAY

The case of Stanly OEM Sofas Limited serves as a critical reminder that statutory auditors must exercise independent judgment, professional skepticism, and strict compliance with reporting standards. Regulators are increasingly focusing on audit quality, transparency, and corporate disclosure discipline, making robust compliance frameworks indispensable.