M/s MSKA & Associates LLP– Inspection Report No. 132.2-2024-03 · 16 Mar 2026

[Image omitted. See the official document.]

राष्ट्रीय वित्तीय रिपोर्टिंग प्राधिकरण National Financial Reporting Authority

Inspection Report

2024

Audit Firm

M/s MSKA & Associates LLP

Network firm of BDO International Limited Firm Registration No. 105047W Inspection Report No. 132.2-2024-03 March 16, 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
Inspection Overview.....................................................................................................................2
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 ....................................................................................................................4
II. Audit Documentation.......................................................................................................4
III. Policies and Procedures for Complaints and Allegations.............................................5
IV. Learning and Development .............................................................................................5
V. Consultation......................................................................................................................5
VI. Monitoring ........................................................................................................................6
PART -C....................................................................................................................................7
Review of Individual Audit Engagement Files Focusing on Selected Areas of Audit.............7
I. Revenue from Operations................................................................................................7
II. Loans & Advances ...........................................................................................................8
III. Trade Receivables ............................................................................................................8
IV. Borrowings........................................................................................................................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 MSKA & Associates LLP (MSKA/ Audit Firm hereinafter) during November 2025 to January 2026. The scope included review of the remedial actions taken by the Firm for the deficiencies reported in the previous report, a review of 3 elements of SQC of the Firm which are Human Resources, Consultation and Monitoring and a review of five selected audit engagements for the year ending 31.03.2024, focusing on three significant audit areas, viz., Revenue from Operations, Loans & Advances (Asset) universally, with Inventories for Company A, Trade Receivables for Company B, Investments for Company C, Borrowings for Company D and Property, Plant & Equipment (PPE) for Company E as entity-specific areas. The inspection included an on-site visit in November & December 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. The firm is required to strengthen network-wide controls over the provision of Non-Audit Services and ensure mandatory re-sign-off by the Engagement Partner for any post-issuance modifications. The Whistleblower Committee, as mandated by policy, needs to be formally constituted to oversee and investigate complaints. While corrective actions have been initiated through training programmes on the Audit LMS, further strengthening is required in training and monitoring. Strengthening of audit evaluation procedures relating to revenue and receivables, as well as assessing their impact on financial reporting, is required. In addition, the firm should strengthen its root cause analysis through more comprehensive coverage. (Para 13 to 31)
• b. In one of the engagement files selected, strengthening was required in adherence to revenue recognition requirements in accordance with applicable Ind AS. (Para 33 to 35)
• c. In one of the engagement files selected, strengthening could be undertaken in the recognition of interest income in respect of a credit-impaired loan to a subsidiary. (Para 36 to 38)
• d. In one of the engagement files selected, the processes and controls relating to receivables reconciliation could be further strengthened. (Para 39 to 41)
• e. In one of the engagement files selected, there was a need to enhance the disclosure of borrowing transactions with related parties. (Para 42 to 44)

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 remedial action taken by the Firm in response to the previous inspection observations, review of certain focus elements of SQC 1, 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 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 MSKA & Associates LLP was one of the audit firms selected as per the above parameters.

6. The selection of individual audit engagements of MSKA & Associates LLP, was largely risk-based, based on financial and non-financial risk indicators identified by NFRA. Accordingly, the audit files in respect of five (5) 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 the remedial measures and improvements made in compliance with the previous inspection observations and review of firm-wide quality controls to evaluate the Audit Firm’s adherence to SQC 1[^1], Code of Ethics and the applicable laws and rules. Focus areas for 2024 inspection are Human Resources, Consultation and Monitoring elements of SQC1.
• 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 selected. Three significant audit areas were identified in respect of each audit engagement viz., Revenue from operations, Loans & Advances (Asset) universally, with Inventories for Company A, Trade Receivables for Company B, Investments for Company C, Borrowings for Company D and Property, Plant & Equipment (PPE) for Company E as entity-specific areas, due to their inherent higher risk of material misstatement.