One of the Adani Group’s longtime auditors is being scrutinised by India’s accounting regulator, according to people familiar with the matter.

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The National Financial Reporting Authority, or NFRA, has in recent weeks started an inquiry into one of the member firms of EY in India, S.R. Batliboi, said the people, who asked not to be identified discussing confidential information.

The regulator has requested files and communications related to its audits on some of the companies controlled by billionaire Gautam Adani going as far back as 2014, the people said.

It’s unclear how long NFRA’s inquiry could take or what repercussions, if any, could be faced by the auditor and Adani’s companies. Representatives for NFRA and the Adani Group didn’t respond to an emailed request for comments. A representative for EY and S.R. Batliboi declined to comment.

The scrutiny of S.R. Batliboi — statutory auditor of five listed Adani companies that produce about half of the group’s revenues — underscores the lingering questions around accounting and disclosures by the sprawling conglomerate that faced a brutal short seller attack in January.

Adani Group, which has forcefully denied Hindenburg’s allegations of corporate malfeasance, is also under a court-mandated probe by India’s markets regulator.

Besides being the current auditors for Adani Power Ltd, Adani Green Energy Ltd, the consumer goods firm Adani Wilmar Ltd, and the two cement makers the tycoon acquired from Holcim Ltd. last year, S.R. Batliboi also signed off on the books of Adani Ports & Special Economic Zone Ltd, the conglomerate’s crown jewel, for a decade leading to 2017.

Indian law prohibits foreign accounting firms from registering as auditors in the country. That’s why Big Four firms including EY operate through independently run affiliates.

Hindenburg raised questions over Adani’s accounting and audits in a January report that erased more than $150 billion in market value at one point from the conglomerate’s listed companies. The group said in a January 29 rebuttal that its firms are audited by “duly certified and qualified” professionals.

Hindenburg’s Adani Strike Adds Pressure on Already Wary Auditors

But months later, changes followed. Adani Total Gas Ltd on May 2 announced the appointment of Walker Chandiok & Co LLP as its new statutory auditor. It replaced Shah Dhandharia & Co, a longtime auditor of several Adani companies, which Hindenburg had said was simply too small to handle such big assignments. Shah Dhandharia said it resigned because of “pre-occupation."

Shied Away

Later that month, Deloitte Haskins & Sells LLP raised concerns over insufficient disclosures around Adani Ports’s transactions with some entities, before resigning in August.

Some auditors, wary of the conglomerate’s aggressive and debt-fueled expansion, have in recent years shied from taking on the group’s companies as clients, Bloomberg News reported in June.

Adani Ports Auditor Deloitte to Resign After Flagging Concerns

S.R. Batliboi’s longest-running current Adani Group assignment is with Adani Power, where it has flagged several accounting matters, particularly over the valuation of a massive loss-making plant, for five years starting in 2018.

Each year, while the company acknowledged the auditor’s concerns, it went ahead with its own valuation of the plant. Such a long-running disagreement is unusual, Bloomberg News reported in March.

NFRA, which was formed in 2018 to oversee India’s auditors, has emerged as an aggressive enforcer of both laws and professional standards governing the accounting industry.

The agency can issue fines, and debar both audit firms and individual auditors for as long as a decade. Over the past five years, it has debarred more than 40 people.

S.R. Batliboi previously brushed with NFRA in the wake of an accounting scandal at Infrastructure Leasing & Financial Services Ltd, an infrastructure developer, in 2018.

Last year, the regulator said that S.R. Batliboi, which had audited the books of IL&FS, had failed to comply with basic audit requirements, and been unqualified for that role because EY simultaneously had provided non-audit services to the company.