Auditors of Rajesh Exports under Scrutiny over Financial Reporting exceeding ₹15 Lakh Cr

The alleged financial reporting discrepancies of over ₹15 lakh crore at Rajesh Exports have brought renewed attention to the role of the company's statutory auditors and the effectiveness of the audit process during the relevant period.

During FY 2020-21 to FY 2023-24, audit services were provided by CA P.V. Ramana Reddy of P.V. Ramana Reddy & Co. and CA P.L. Venkatadri, partner at B S D & Co.

In an interim order issued on June 3, SEBI took action against Rajesh Exports and its Chairman and Managing Director, Rajesh Mehta. The regulator directed the company to address alleged discrepancies in its filings and cooperate with the ongoing investigation.

According to SEBI's observations, certain information and audit-related documents sought during the investigation were not furnished to the regulator. SEBI has also raised questions regarding the auditors' review of various transactions and accounting disclosures.

The regulator's order refers to concerns relating to related-party transactions, revenue reporting practices and the reporting of certain liabilities. These observations form part of the ongoing regulatory proceedings and remain subject to further examination.

Under the Companies Act and applicable auditing standards, statutory auditors of listed companies are expected to exercise professional skepticism and obtain sufficient audit evidence before expressing an opinion on financial statements. Where significant audit deficiencies are identified, regulators such as SEBI and the National Financial Reporting Authority (NFRA) may examine the conduct of auditors and take action in accordance with law.

The matter is currently under investigation, and regulatory proceedings are ongoing.