The National Financial Reporting Authority (NFRA) has launched an investigation into the alleged financial misstatement case involving Rajesh Exports. Chairman Nitin Gupta confirmed that the audit regulator has started the process after a referral from the Securities and Exchange Board of India (SEBI). Gupta mentioned that the regulator is already looking into the matter but did not provide a timeline for completion.
The case pertains to Sebi’s actions against the gold refiner for purported discrepancies in its financial statements totaling Rs 15.15 trillion over an extended period. In June, Sebi forwarded the issue to the NFRA for appropriate action against the company’s statutory auditors. Gupta also updated on the NFRA’s probe into accounting irregularities in the derivatives portfolio of IndusInd Bank, noting the complexity might prolong the investigation.
Gupta emphasized that the NFRA’s responsibilities extend beyond investigations to implementing safeguards against accounting and auditing malpractices. He mentioned that the authority has proposed changes to auditing standards to the Ministry of Corporate Affairs for consideration. Speaking at a conference on governance and AI, Gupta highlighted the potential of AI to enhance governance but cautioned about the new risks it introduces.
He warned about the need for internal mechanisms to challenge AI deployment and emphasized the importance of professional judgment over efficiency. Gupta stressed the role of boards, audit committees, CFOs, and financial functions in ensuring proper oversight and not solely relying on AI outputs.
