NFRA is Flagging Lapses at PwC, EY, KPMG, and BDO

India’s audit regulator, the National Financial Reporting Authority (NFRA), has released a series of scathing inspection reports highlighting significant procedural lapses across firms affiliated with global giants PwC, EY, KPMG, and BDO.

The reports, published on March 16, 2026, expose deep-seated issues ranging from independence breaches and fraud risk miscalculations to the discovery of a fake Chartered Accountant (CA) within a top-tier firm.

PwC: Independence Breaches and Hiring Gaps Flagged by NFRA

The inspection of PwC network firms, including Price Waterhouse Chartered Accountants LLP, revealed a startling breach of independence involving six partners who acquired securities in the holding companies of audited entities.

Furthermore, the regulator flagged a major human resources failure: a person with a fake CA certificate remained undetected within the firm for two years.

NFRA also noted that PwC failed to explicitly evaluate the impact of a CBI investigation into a client’s holding company, potentially compromising the reliability of the audit.

KPMG & EY: Underestimating Fraud and Monitoring Risks

A separate report on KPMG affiliate BSR Affiliates Network pointed toward a “bias” in fraud risk assessment.

The regulator found that the audit team failed to consider the risk of senior management siphoning cash, focusing solely on employee-level fraud.

Similarly, for EY affiliate SRBC & Co LLP, the NFRA demanded a more robust monitoring mechanism.

It observed that while the firm has policies against providing non-audit services to audit clients, the practical application of these rules was insufficient to guarantee firm-wide independence.

Read Also: Is Your Tech Job Safe? AI Productivity Shift at Meta Could Change Hiring Forever

BDO: NFRA Flags Governance and Documentation Lapses

The NFRA advised MSKA & Associates, a BDO affiliate, to formally constitute a whistleblower committee and tighten network-wide controls.

The regulator discovered instances where audit files contained duplicate papers and unexplained manual calculations.

Additionally, the firm was criticized for failing to ensure mandatory re-sign-off by engagement partners when audit reports were modified after issuance.

A Push for Market Integrity

These annual inspections are designed to provide “actionable feedback” early in the financial reporting cycle.

The NFRA emphasized that while some firms have shown improvement since 2025, the persistent gaps in evaluating arm’s length pricing and related-party transactions remain a threat to investor protection.

The regulator intends to complete inspections for ten major firms by the end of March to bolster the integrity of India’s financial ecosystem.

Note: We are also on WhatsApp, LinkedIn, and YouTube to get the latest news updates. Subscribe to our Channels. WhatsApp– Click Here, YouTube – Click Here, and LinkedIn– Click Here.