BSR Affiliates Network – Inspection Report No.132.2-2024-04 · 16 Mar 2026

[Image omitted. See the official document.]

राष्ट्रीय वित्तीय रिपोर्टिंग प्राधिकरण

National Financial Reporting Authority

INSPECTION REPORT

2024

Audit Firms

B S R & Co. LLP

B S R & Associates LLP

B S R and Co

B S R S & Co (formerly known as B S R and Associates)

Of

B S R Affiliates Network

Network Registration No. NRN/W/00011 Inspection
Report No.132.2-2024-04

March 16, 2026

National Financial Reporting Authority
7th Floor, Hindustan Times House
18-20, Kasturba Gandhi Marg
New Delhi 110001

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Contents

Executive Summary ................................................................................................................. 2
Inspection Overview ................................................................................................................ 3
Audit Quality Inspection Approach ........................................................................................ 3
Inspection Methodology .......................................................................................................... 4
Audit Firm’s Profile ................................................................................................................ 4
Acknowledgement ................................................................................................................... 5
Review of Firm-Wide Audit Quality Control System .............................................................. 5

• I. Independence Requirements ....................................................................................................... 5
  Non-Audit Services to Immediately Past Audit Clients .................................................................. 5
• II. Monitoring .................................................................................................................................. 6
  Root Cause Analysis ........................................................................................................................ 6
• III. Observations of Previous Inspections ........................................................................................ 6
  Review of Individual Audit Engagement Files Focusing on Selected Areas of Audit ............... 6
• IV. Revenue from Operations .......................................................................................................... 7
  Cancelled Orders ............................................................................................................................. 7
  Refunds ............................................................................................................................................ 7
  Bias in the Assessment of Risk of Fraud in Revenue ...................................................................... 7
• V. Provisions .................................................................................................................................... 9
• VI. Inventory ................................................................................................................................... 9
• VII. Loans and Advances .............................................................................................................. 10
• VIII. Documentation of Contradictory Evidence .......................................................................... 10
• IX. Audit Documentation .............................................................................................................. 10
  Chronology of events .............................................................................................................. 12

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PART A

Executive Summary

Section 132 of the Companies Act 2013 (the Act) mandates the National Financial Reporting Authority (NFRA), inter alia, to monitor compliance with Auditing Standards, to oversee the quality of service of the professions associated with ensuring compliance with such standards, and to suggest measures required for improvement in the quality of their services. Under this mandate, NFRA conducted an audit-quality inspection of the Chartered Accountants firms forming part of the B S R & Affiliates network (the ‘Audit Firm’ or ‘BSR’ hereafter). The scope included a review of firm-wide quality controls pertaining to Independence, Human Resources, Consultations and Monitoring to assess the Audit Firm’s (also referred to as “the Firm’s”) adherence to SQC-1, including follow-up from previous inspections, and a review of selected Audit Documentation for the annual statutory audit of financial statements for the year ending 31.03.2024. Two focus areas, namely Revenue Recognition and Loans and Advances, and one engagement-specific area selected based on risk, were taken for inspection in each audit engagement. The on-site inspection was conducted in November 2025.

During the inspection, the Inspection Team held discussions with the Audit Firm's personnel, reviewed policies and procedures, and examined documents to reach the prima facie observations. These observations were initially discussed with the Audit Firm, and after necessary changes, they were conveyed to the Audit Firm in writing. The Audit Firm's responses and documents have been reviewed, and the Final Inspection Report has been issued after consideration of all submissions. This public version of the final inspection report excludes confidential or proprietary information, as pointed out by the Audit Firm.

The key observations in the Final Inspection Report are summarised as follows.

• a. On firm-wide quality aspects, the firm has been found to be generally compliant with independence requirements and previous years’ inspection findings.
• b. The policies on acceptance of non-audit services for the immediate past audit clients and the root cause analysis policies require strengthening.
• c. In one audit engagement of an unlisted company, we observed insufficient evidence supporting the audit opinion. The details are given in part VI of this report. Other matters affecting overall audit quality are identified in the selected audit engagements. However, these are not of such significance as to affect the audit opinion.

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Inspection Overview

1. Section 132 of the Act, inter alia, mandates NFRA to monitor compliance with Auditing Standards, to oversee the quality of service of the professions associated with ensuring compliance with such standards, and to suggest measures required for improvement in the quality of their services. The relevant provisions of the NFRA Rules prescribe procedures for this, including the evaluation of the sufficiency of the auditor’s quality control system and the manner in which the auditors document the quality control procedures. Under this mandate, NFRA initiated audit quality inspections in November 2025 for the Audit Firm. The overall objective of audit quality inspections is to evaluate compliance of the Audit Firm with auditing standards and other regulatory and professional requirements, and the sufficiency and effectiveness of the quality control system of the Audit Firm, including:

   • (a) adequacy of the governance framework and its functioning.
   • (b) effectiveness of the firm’s internal control over audit quality; and
   • (c) system of assessment and identification of audit risks and mitigating measures.

2. Inspections involve a review of the quality control policy, a review of certain focus areas, a test check of the quality control processes, and a test check of audit engagements performed by the Audit Firm during the year.

3. Inspections are intended to identify areas and opportunities for improvement in the Audit Firm’s system of quality control. Inspections, however, are not designed to review all aspects or identify all weaknesses in the engagement performance, the governance framework, internal control system, or audit risk assessment framework, and they are not designed to provide absolute assurance about the Audit Firm’s quality of audit work. With respect to selected audit assignments, inspections are not designed to identify all weaknesses in the auditors' audit work on the financial statements of the selected companies. Inspection reports are also not intended to be either a rating model or a marketing tool for Audit Firms.

Audit Quality Inspection Approach

4. Selection of Audit Firms inspections in 2024 was based on various parameters including the information filed in form NFRA 2, the extent of public interest involved, as evidenced by the size of the firm, its composition and nature, the number of audit engagements completed in the year under review, complexity and diversity of preparer’s financial statements (henceforth, Companies) audited by the firm and other risk indicators. B S R & Affiliates was one of the Audit Firm networks selected as per the above parameters. BSR & Affiliates is a registered network with the Institute of Chartered Accountants of India. This is a network of eight audit firms, a sub-licensee of KPMG International. For this year's inspection, the entire BSR Affiliates network was treated as a single entity, and any reference to BSR/Audit Firm in this report includes all member firms of BSR & Affiliates that fall under Rule 3 of the NFRA Rules 2018.

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5. The selection of individual audit engagements for this inspection was largely risk-based, based on financial and non-financial risk indicators identified by NFRA. Accordingly, two focus areas for the Statutory Audit of financial statements for the year ending 31.03.2024 were identified for each audit engagement: Revenue Recognition and Loans & Advances. A third significant area, specific to each engagement, was also selected during the inspection based on the risk of material misstatement.

6. The overall scope of the inspection of BSR was as follows:

   • a. Review of firm-wide quality controls to evaluate the Audit Firm’s adherence to SQC 1, Code of Ethics and the applicable laws and rules. The 2024 inspection of BSR Network covered elements of the firm’s quality control system, including independence, human resources, consultation, and the firm’s internal quality inspection program.
   • b. Review of individual Audit Engagement Files- A sample of five (5) individual audit engagement files pertaining to the annual statutory audit of financial statements for the year ending 31.03.2024 was initially selected. In three of five samples, because the major revenue and assets were contributed by certain material subsidiaries, the inspection team reviewed five additional engagement files related to the audit of these subsidiaries. Thus, the total sample size for this inspection has increased to 10 audit engagements from the initially planned 5.
   • c. The selected sample of ten audit engagements is not representative of BSR’s total population of audit engagements completed for the year under review.