Inspection Report: M/s Singhi & Co. (2024) · 132.2-2024-10

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राष्ट्रीय वित्तीय रिपोर्टिंग प्राधिकरण

National Financial Reporting Authority

INSPECTION REPORT

2024

Audit Firm: M/s Singhi & Co.
Firm Registration No. 302049E
Inspection Report No.132.2-2024-10
March 27, 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. Personal Independence Requirements......................................................................................................5
II. Audit Documentation ...............................................................................................................................6
III. Consultations...........................................................................................................................................6
IV. Human Resources ...................................................................................................................................7
Performance Evaluation................................................................................................................................7
V. Engagement Performance.........................................................................................................................8
Use of Appropriate Technology....................................................................................................................8
Uniformity in Practices.................................................................................................................................8
Review of Individual Audit Engagement Files Focusing on Selected Areas of Audit................................9
I. Revenue from Operations.........................................................................................................................9
Substantive Testing.......................................................................................................................................9
Documentation of Contradictory Evidence.................................................................................................10
Other Operating Income..............................................................................................................................11
Controls over Revenue................................................................................................................................11
II. Loans & Advances .................................................................................................................................12
Substantive Procedures...............................................................................................................................12
Controls over Loans....................................................................................................................................12
External Confirmations...............................................................................................................................13
III. Information Technology (IT) Controls .................................................................................................13
IV. Capital Work-in-Progress (CWIP)........................................................................................................14
V. Audit Opinion.........................................................................................................................................14
IV. Audit Documentation............................................................................................................................15
Chronology of events..................................................................................................................................16
Appendix A: Audit Firm’s Response to the Inspection Report................................................................17

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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 firm M/S Singhi & Co. The scope included a review of firm-wide quality controls to assess the Audit Firm’s (also referred to as “the Firm’s”) adherence to SQC-1, 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) The Firm is required to implement measures for continuous monitoring of personal independence declarations made by the members of the firm towards their investments. This is further detailed in paragraphs 12 to 15 of the report.

• (b) The Firm’s policy and practice of audit documentation needs to be further strengthened. The Firm is required to strengthen controls and practices for important documentation matters, including post-archival revisions and the serial numbering of audit documents. These observations are detailed in paragraphs 16 and 17 of the report.

• (c) The Firm’s policy should be reviewed and updated to include a policy for consultations on significant matters. The current consultation documentation needs to be updated to include detailed explanations of the issues under consultation. This is further detailed in paragraphs 18 to 22 of the report.

• (d) The Firm’s performance evaluation systems require strengthening to include quantifiable performance indicators to support stronger alignment between performance and audit quality. This is further detailed in paragraphs 23 to 26 of the report.

• (e) The Firm requires enhancing uniform procedures across all PIE audit engagement practices. This is further detailed in paragraphs 31 to 36 of the report.

• (f) Observations on three audit engagements in areas of Revenue, Loans and Advances and other significant areas with respect to the selected three engagement files are dealt with in detail in Part C of the report. In one audit engagement for an unlisted company, we observed insufficient evidence to support the audit opinion. The details are given in paragraphs 64 to 69 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.

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, 2018, as amended from time to time, 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 for assessing and identifying 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 for Financial Year 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. M/s Singhi & Co. was one of the Audit Firms selected as per the above parameters.

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 scope of the inspection 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 FY 2024 inspection of Singhi & Co. covered all elements of the Firm’s quality control system, including leadership responsibilities within the Firm, auditor independence, acceptance and continuation of audit clients, human resources, engagement performance, and the Audit Firm’s internal quality inspection program.

• (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 year ending 31.03.2024 was selected. Two thematic focus areas were identified for each audit engagement: Revenue Recognition and Loans & Advances. A third significant area, specific to each engagement, was also selected based on the higher risk of material misstatement.

• (c) The selected sample of three audit engagements is not representative of the Firm’s total population of audit engagements completed for the year under review.