![Deloitte Office, Bangalore Deloitte Office](https://data1.ibtimes.co.in/en/full/637922/deloitte-office.jpg?h=450&l=50&t=40)
Days after the preliminary probe by the Serious Fraud Investigation Office (SFIO) found that Deloitte was responsible for misconduct in auditing the Infrastructure Leasing & Financial Services (IL&FS) accounts, the Ministry of Corporate Affairs may invoke Section 140 (5) of the Companies Act to debar the firm. In the initial investigations, the SFIO concluded that that audit firm Deloitte was responsible for the falsification of financials of IFIN, a subsidiary of IL&FS.
The 140 (5) reads, " Without prejudice to any action under the provisions of this Act or any other law for the time being in force, the Tribunal either suo moto or on an application made to it by the Central Government or by any person concerned, if it is satisfied that the auditor of a company has, whether directly or indirectly, acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, it may, by order, direct the company to change its auditors."
![The IL&FS group is facing serious liquidity crisis and has defaulted on interest payments on various debt repayments since 27 August. IL&FS](https://data1.ibtimes.co.in/en/full/700311/ilfs.jpg?w=620&h=413&l=50&t=40)
The leading news agency, IANS reported that if the Ministry of Corporate Affairs goes ahead with the punishment, it will be the second occasion when Price Waterhouse was banned for similar malpractice in the Satyam scam. The Satyam scam was unearthed in 2009, when Byrraju Ramalinga Raju, it's Chairman and CEO was arrested for manipulated the accounts of Rs 141.62 billion in several forms. In 2018, SEBI (Securities and Exchange Board of India) barred Price Waterhouse from auditing any listed company in India for 2 years, saying that the firm was complicit with the main perpetrators of the Satyam fraud and did not comply with auditing standards. Moreover, two of its partners were banned for a period of three years. The regulator further went on to impose a disgorgement of Rs 130.9 million on Price Waterhouse, and two of its chartered accountants - S Gopalakrishnan and Srinivas Talluri.
However, Deloitte denied any wrongdoings in the audit of IL&FS accounts, its spokesperson said "The investigations on the company IFIN are in progress and we are cooperating fully. We reaffirm that we have conducted our audits in accordance with the Standards on Auditing and applicable laws and regulations." The audit firm argued that the subsidiaries of the IL&FS were audited by other smaller firms, most of them not being a part of Big Four. It was further observed that during the time when Deloitte was auditing the Group, the secured loans were valued by other auditors including Knight Frank and N M Raiji & Co.