M/s B D G & CO LLP – Inspection Report No. 132.2-2024-08 · 27 Mar 2026

[Image omitted. See the official document.]

राष्ट्रीय वित्तीय रिपोर्टिंग प्राधिकरण
National Financial Reporting Authority

Inspection Report

2024

Audit Firm

M/s B D G & CO LLP

Firm Registration No. 119739W/W100900
Inspection Report No. 132.2-2024-08
March 27, 2026

NFRA, 7^th Floor,
Hindustan Times House
18-20, Kasturba Gandhi Marg,
New Delhi-110001

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Contents

PART – A. .............................................................................................................................................1
Executive Summary...................................................................................................................................1
Audit Quality Inspection Approach.........................................................................................................2
Inspection Methodology ............................................................................................................................3
Audit Firm’s Profile ..................................................................................................................................3
Acknowledgment ........................................................................................................................................3
PART- B................................................................................................................................................4
Review of Firm-Wide Audit Quality Control System ...........................................................................4
I. Independence requirements.........................................................................................................4
II. Client Acceptance and Continuance Policy...............................................................................4
III. Engagement Performance............................................................................................................4
IV. Monitoring .....................................................................................................................................5
PART -C................................................................................................................................................6
Review of Individual Audit Engagement Files Focusing on Selected Areas of Audit .......................6
I. Revenue from Operations............................................................................................................6
II. Loans & Advances........................................................................................................................6
III. Investments....................................................................................................................................8
IV. Property, Plant & Equipment.....................................................................................................9
PART- D..............................................................................................................................................10
Chronology of Events.............................................................................................................................. 10
Annexure A: Audit Firm’s Response to this Inspection Report ........................................................... 11

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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 quality of their services. Under this mandate, NFRA conducted an audit quality inspection of B D G & CO LLP (B D G/ Audit Firm hereinafter) in October 2025. The scope included a review of compliance with SQC policy of the firm and a review of three selected audit engagements of financial statements for the year ending 31.03.2024, focusing on three significant audit areas, viz., Revenue from Operations, Loans & Advances (Asset) universally, with Investments for Company A, Property, Plant & Equipment (PPE) for Company B, and Borrowings for Company C as entity-specific areas. The inspection included an on-site visit in October 2025.

During the inspection, the Inspection Team held discussions with the audit firm personnel, reviewed policies and procedures and examined documents to arrive at the prima facie observations. These observations were conveyed to the audit firm. After examining the replies, NFRA conveyed a draft inspection report to the audit firm. The replies and documents submitted by the audit firm have been examined and this report is issued. The observations in this report are based on policy documents and/or results of samples tested by the inspection team. The key observations are summarised as follows:

• a. Certain aspects of SQC compliance require strengthening, particularly the alignment of documentation relating to independence declarations with the requirements prescribed under Section 141 of the Companies Act, 2013 and the applicable Standards. Improvements are also needed in documentation concerning client acceptance and continuance procedures, review of audit work, monitoring process, the Engagement Quality Control Review (EQCR) policy and data storage policy. (Para 13 to 26)
• b. In all three engagement files selected, documentation relating to verification of revenue from operations could be strengthened. (Para 28 to 29)
• c. In two of the engagement files selected, there was scope to further strengthen the audit documentation and procedures relating to the verification of Loans and Advances. Improvements are required in the retention of audit evidence and documentation of procedures performed, including those pertaining to loans to related parties, as well as verification and reporting under the Companies (Auditor’s Report) Order, 2020 (CARO 2020). (Para 30 to 46)
• d. In separate engagement files selected for review, there was scope to strengthen the audit documentation relating to the verification of investments (including impairment assessment) and Property, Plant and Equipment. (Para 47 to 51)

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Inspection Overview

1. The overall objective of audit quality inspections is to evaluate compliance of the audit firm/auditor with auditing standards and other regulatory and professional requirements, and the sufficiency and effectiveness of the quality control systems of the audit firm/auditor, 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 are intended to identify areas and opportunities for improvement in the audit firm’s system of quality control. Inspections, by nature, are distinct from investigations undertaken under section 132 (4) of the Companies Act, 2013. However, in certain cases, test-check by the inspection teams may provide basis for or require reference of such cases/matters for enforcement or investigation under applicable provisions of the Act and Rules.

3. This year’s inspection involves a review of the quality control policy and a test check of audit engagements performed by the audit firm relating to the statutory audit of financial statements for the year ending 31.03.2024.

4. Inspections are, however, not designed to review all aspects and identify all weaknesses in the governance framework system of internal control, or audit risk assessment framework; nor are they designed to provide absolute assurance about the audit firm’s quality of audit work. In respect of selected audit assignments, inspections are not designed to identify all the weaknesses in the audit work performed by the auditors in the audit of 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

5. Selection of audit firms for the 2024 inspections was based upon the extent of public interest involved, as evidenced by the size, composition, and nature of the audit firm; the number of audit engagements completed in the year under review; complexity and diversity of the company’s financial statements audited by the firm and other risk indicators. M/s B D G & CO LLP was one of the audit firms selected as per the above parameters.

6. The selection of individual audit engagements of B D G & CO LLP was largely risk-based, based on financial and non-financial risk indicators identified by NFRA. Accordingly, the audit files in respect of three (3) audit engagements relating to the statutory audit of financial statements for the year ending 31.03.2024 were reviewed during the inspection.

7. The scope of the inspection was as follows:

• a. Review of firm-wide quality controls to evaluate the audit firm’s adherence to SQC 1¹, Code of Ethics, and the applicable laws and rules. Focus areas for 2024 inspection are all elements of SQC 1.
• b. Review of individual audit engagement files- A sample of three (3) individual audit engagement files pertaining to the annual statutory audit of financial statements for the

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year ending 31.03.2024 was selected. Three significant audit areas were identified in respect of each audit engagement viz., Revenue from Operations and Loans & Advances (Asset) universally, with Investments for Company A, Property, Plant & Equipment for Company B, and Borrowings for Company C as entity-specific areas, due to their inherent higher risk of material misstatement.

The selected sample of three individual audit engagements is not representative of the firm’s total population of the audit engagements completed by the firm for the year under review.

Inspection Methodology

8. An entry meeting was held with M/s B D G & CO LLP on 17.09.2025 at NFRA office. The firm presented an overview of the Governance and Management Structure, firm-wide System of Quality Control, their audit approach and methodologies, including IT Systems. The on-site inspection was carried out during October 2025. The inspection methodology comprised meetings, walkthroughs, presentations and interviews with members of the leadership team as well as the Engagement Teams of the selected audit engagements.

9. The areas of weaknesses or deficiencies on the part of the audit firm, included in the inspection reports, should be viewed as areas of potential improvement and not as a negative assessment of the work of the audit firm unless specifically indicated otherwise.

Footnotes

1. Standard on Quality Control (SQC) 1 – Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements. ↩