Lok Sabha Question No. 1300 (UNSTARRED), answered on 2020-09-19
Subject: Cases under SFIO
Ministry: CORPORATE AFFAIRS
Asked by: Dushyant Singh

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO.  1300 ANSWERED ON SATURDAY, THE 19 TH  SEPTEMBER, 2020 BHADRAPADA 28, 1942 (SAKA)

## CASES UNDER SFIO QUESTION

1300: SHRI DUSHYANT SINGH: Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

- (a) the details of the top 50 cases of fraudulent companies in terms of the amount involved that is being investigated by the Serious Fraud Investigation Office (SFIO);
- (b)  whether  these companies maintain their books of account as per prescribed standards; if so the details thereof and if not the reasons therefor;
- (c) the details of the bank and the amount of money that  has  been borrowed from them by these top 50 companies;
- (d)  whether  the  SFIO  has  been  working  along  with  National  Financial  Reporting Authority to design audit norms for auditors of corporates, if so, the details thereof and if not, the reasons therefor; and
- (e)  the  number  of  cases  that  have  been  registered  with  SFIO  and  the  rate  of conviction along with the details of the time taken to revolve the cases?

## ANSWER

THE MINISTER OF STATE FOR FINANCE AND CORPORATE AFFAIRS                          (SHRI ANURAG SINGH THAKUR)

वित्त एिं कारपोरेट कार्य मंत्रालर् में राज्य मंत्री

(

श्री अनुराग व ंह ठाक ु र )

(a): At present, investigation of 92 cases (excluding 6 cases where stay has been granted by courts or investigation orders were quashed by the courts) are being carried out by SFIO. The gradation of cases under investigation in terms of the amount involved could be known after the completion of investigation of these cases.

(b)&(c): The books of account and other record in the above mentioned cases are being investigated into for detecting the fraud.

(d): The auditors of the companies are governed under the Companies Act, 2013 and rules thereunder.  Chapter X (Section 139 to 148) of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014 deal with the provisions of Audit  and  Auditors.  Section  143(9)  of  the  Companies  Act,  requires  that  every auditor  shall  comply  with  the  auditing  standards  while  auditing  the  financial statements of the Companies and in case of contravention of this section, the auditor shall be punishable as per section 147(2) of the Act. After constitution of

the National Financial Reporting Authority (NFRA), these auditing standards are notified  by  the  Central  Government  under  section  143(10)  of  the  Act,  on  the recommendations of NFRA, which makes such recommendations to the Central Government  after  examination  of  the  proposal  received  from  the  Institute  of Chartered Accountants of India (ICAI). Further, in pursuance of section 143(11) of the Act and in order to bring the quality of reporting by the auditors on the financial statements of the companies, the Central Government in consultation with NFRA, from time to time, by way of special order, directs that the auditor's report shall also include a statement on such matters as may be specified therein. The Ministry has recently notified the Companies (Auditor's Report) Order, 2020 (CARO 2020) vide notification dated 25.02.2020 in pursuance of section 143(11) of the Act.

In order to ensure that an oversight over auditors is especially provided for in  those  companies  and  body  corporates  where  significant  public  interest  is inherent, the Government of India has constituted NFRA under section 132 of the Act for oversight on auditors and audit firms associated with all listed companies and certain large unlisted public companies as prescribed under the Rules.  Under section 132 of the Companies Act, 2013, NFRA is responsible for recommending accounting  and  auditing policies and standards, monitor and  enforce the compliance with accounting standards and auditing standards, oversee the quality of  service  of  the  professions  associated  with  ensuring  compliance  with  such standards, suggest measures required for improvement in quality of service and such other related matters, undertaking investigations in respect of quality of audit of listed companies and Public unlisted companies above a prescribed threshold, and imposing sanctions against defaulting auditors and audit firms in the form of monetary penalties or debarment from being appointed as an auditor or internal auditor or undertaking any audit or internal audit of any company or body corporate or performing any valuation, under section 247 of the Act, for a minimum period of six months or such higher period not exceeding ten years.

(e): The details of complaints filed by SFIO before various courts, conviction rate and average time taken for disposal of complaints in the Courts, as on date, are as under:

| No. of complaints filed   | No of complaints   | No of complaints                            | Conviction rate   |                 |
|---------------------------|--------------------|---------------------------------------------|-------------------|-----------------|
|                           | Disposed           | Conviction secured out of disposed of cases | (%)               | Avg. Time taken |
| 1182                      | 462                | 326                                         | 70 %              | 63.5 months     |

The conviction rate up to the year 2013-14 was 48% and as on date it has come to 70%.

******