NFRA warns auditors against non-accrual of interest on NPA borrowings

Mere classification of a firm's loans as NPAs by lender banks does not relieve the borrower from its liability towards payment of interest or the principal, the authority says

The National Financial Reporting Authority has cautioned companies and auditors against non-accrual of interest on borrowings declared NPA by banks or for which the company is negotiating a one-time settlement.

“Mere classification of the company’s loans as NPAs by the lender banks does not relieve the borrowing firm from its liability towards payment of interest or the principal,” NFRA said.

The issue had come to NFRA’s attention during the proceedings of professional misconduct by the statutory auditor of Vikas WSP Ltd. The authority has observed similar violations in respect of many other companies too.

“The company’s discontinuation of recognition of