Are Indian listed companies affected by EY Ban ?

Impact of EY Ban by Banking Regulator

The Reserve Bank of India (RBI) has banned the audit firm SR Batliboi & Co. LLP. SR Batliboi is a member firm of EY. SR Batliboi is the first big 4 accounting firm to get banned by banking regulator. Central Bank banned EY for compromising the audit quality.

Economic Times had reported that the regulator’s action was linked to the audit of Yes Bank. SR Batliboi audited financial statement for the fiscal year ended March 2016. These financial statements had thrown up discrepancies in reported bad loans of Yes Bank.

EY Network firms

SR Batliboi & Co LLP and S R Batliboi & Associates represent EY Network in India. These are the firms of Chartered Accountants. They are primarily involved in Audit practice. However, presence of EY is not limited to only Audit Practice. Following companies in group are involved in non-audit services

  1. S R B C & CO LLP
  2. S R B A & CO LLP
  3. S R B A & Associates LLP
  4. ERNST AND YOUNG INDIA PRIVATE LIMITED
  5. ERNST & YOUNG SERVICES PRIVATE LIMITED
  6. EY RESTRUCTURING LLP

Listed Clients of EY

Ban on EY network firm is only for one year. EY is not restricted from auditing the listed clients as they are banned by banking regulator. EY firms are restricted from performing statutory audits of commercial banks. will have significant impact on Indian listed companies.

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Most of the audit clients of EY are not likely to be affected. It is not clear whether all the companies in financial services are affected by this decision. Here is the list of the companies audited by EY group firms

  • Bajaj Finance Limited
  • Bajaj Housing Finance Limited
  • National Trust Housing Finance Limited
  • Yuj Home Finance Private Limited
  • Au Small Finance Bank Limited
  • Equitas Small Finance Bank Limited
  • Indiabulls Housing Finance Limited
  • Svakarma Finance Private Limited
  • Lendingkart Finance Limited
  • Electronica Finance Limited
  • Axis Finance Limited
  • Xander Finance Private Limited

It is important to track the decisions of the various government agencies including the National Financial Reporting Authority and NCLT.