IndusInd's accounting lapses: NFRA to seek audit report by Grant Thornton

The National Financial Reporting Authority (NFRA) would seek the report on IndusInd Bank’s forensic audit conducted by Grant Thornton to ascertain if further investigation is required, official sources told Business Standard.

  The NFRA was in talks with the Reserve Bank of India (RBI) to check on the investigations conducted by the central bank so far, to avoid duplication.

  “The RBI has informed the NFRA that the forensic audit had been ordered by the central bank itself. That report needs to be studied before deciding on action that needs to be taken by the Authority going forward,” a senior official said.

  The NFRA had received a complaint about accounting lapses in the IndusInd Bank through the Centralised Public Grievance Redress and Monitoring System (CPGRAMS). 

  On March 10, IndusInd Bank had disclosed certain discrepancies in its account balances relating to its derivatives portfolio. The bank said its detailed internal review had estimated an adverse impact of roughly 2.35 per cent of its net worth as of December 2024.

  NFRA’s domain of investigation includes auditors of all listed entities.

  IndusInd said its board suspected a “fraud may have been committed against the bank involving certain employees having a significant role in accounting and financial reporting”. Chartered Accountants M S K A & Associates and M P Chitale & Co were the Joint Central Statutory Auditors of the IndusInd Bank for the financial year ended March 31, 2024, according to their annual report. On May 29, the board of Institute of Chartered Accountants of India (ICAI) decided to review the financial statements and the statutory auditors’ reports of the IndusInd Bank for 2023-24 (FY24) and 2024-25 (FY25).

  If ICAI’s Financial Reporting and Review Board finds any serious non-compliance affecting the true and fair view of financial statements, it refers the case to its director-discipline for further investigation. The Board also informs such deficiencies to the regulatory body relevant to the enterprise for appropriate action.

  The Securities and Exchange Board of India (Sebi) had initiated a suo motu investigation to identify trades made with unpublished price-sensitive information (UPSI) related to the derivative losses after the disclosures made by IndusInd Bank. 

Last week, the market regulator asked five senior IndusInd Bank officials, including former deputy chief executive officer (CEO) Arun Khurana and former CEO Sumant Kathpalia, to disgorge around ₹20 crore for alleged insider-trading.