MahaRERA issues show-cause notice to chartered accountants

Mumbai, May 3, 2023

MahaRERA has issued show-cause notices to chartered accountants and has also written to the Institute of Chartered Accountants of India after it noticed that MahaRERA regulations were being violated as the same chartered accountant has been engaged for the role of the project auditor as well as that of the statutory auditor.

Under MahaRERA rules, promoters while withdrawing money from the bank have to submit form 3 certified by the project auditor. Similarly, the developer is also required to submit a statutory audit report by a statutory auditor/accountant once a year. Both roles have to be performed by different accountants or firms. MahaRERA has also noticed discrepancies in the UDIN numbers provided by the chartered accountants.

During scrutiny of the information submitted by the promoters, MahaRERA noticed that both the forms and certificates were submitted by a single chartered accountant in violation of MahaRERA regulations.

"The intention of the promoters in appointing the same chartered accountant for performing both responsibilities are malafide. The statutory auditor is expected to look at mistakes or gaps in the audit carried out by the project auditor. If both are same persons, it raises suspicion whether the promoters have something to hide," said a MahaRERA official.

"We have issued notices to chartered accountants and we have also written to the Institute of Chartered Accountants to conduct training sessions to comply with regulations of MahaRERA and provisions of the Real Estate (Regulation and Development) Act. We will take further action and make the promoters accountable," the official added. The Unique Document Identification Number (UDIN) numbers provided by the chartered accountants helped MahaRERA in detecting the violations.

Under Section 4(2) (1) (D) of the Real Estate Act, every promoter should keep 70 percent of the money received from the customers by opening a separate account. Before withdrawing these funds at each stage of construction, the percentage of completion of the work and expenditure must be certified by project engineer, architect and chartered accountant. The developer is also required to update a statutory audit report on the website of MahaRERA once a year.

[The Times of India]