National Financial Reporting Authority’s(NFRA) debarment of Deloitte’s Udayan Sen has sent alarm bells ringing across the audit firms currently under investigation by the regulator.The audit firms and their lawyers are currently poring over the detailed 88 page order to understand the regulator's observations and get a sense of which way the NFRA might swing in their case. The NFRA report has again put a spotlight on the confusion on what services can be provided by an auditor to its audit clients.Experts say that it's an old issue arising out of Section 144 of the Companies Act 2013 that says that ‘management services’ are not permitted to the auditors. But there’s confusion on the definition of management services and to which affiliates in a network firm, the rules apply. Currently, ICAI is working on a definition of what constitutes ‘management services’. And in India network firms — all Big Four firms — take up audits through affiliates that are separate legal entities. In absence of a clear definition the network firms use the internationally acknowledged The International Ethics Standards Board for Accountants (IESBA) definition with regards to services they can offer their audit clients. “NFRA has used the term management services in a very expansive way,” said an audit leader of an Indian firm. Also what’s bothering the auditors is NFRA’s firm position that if courts do not grant a stay on the proceedings initiated by it, even if the matter is sub-judice, it will go ahead with its orders. Also NFRA has rejected the view that the firm wasn’t working or accessing documents during the Covid-19 lockdown so required more time to reply to regulator’s questions. While charging the chartered accountant with misconduct, the NFRA order said that the auditor should have disclosed some material information which was known to him even if he wasn’t required to. “How can I reveal every fact that I know about the client in an auditors report? No client won't even allow me to peek into his books again. The management makes the accounts, we just audit them. We have rules and standards to follow. The regulator seems to operate in an academic world. The auditor exercises his judgement. The auditing standards are principles based,” said an audit partner in a Big Four. Some of the auditors are also perplexed at the period NFRA has undertaken to investigate. “The regulator has taken into accounts the FY 17-18 accounts. Why not FY 18-19 when the going concern qualifications were really relevant. There is also certain opacity in the process the regulator followed while preparing the report,” said a CEO of an mid-tier auditing firm. Many say that the auditors have become the favourite whipping boy by the government even as bankers and government officials—who play bigger roles in most frauds—go scot-free.“Auditors have become a favourite punching bag for regulators such as MCA, SEBI, RBI and now NFRA. However, this order stands out due to its speedy disposal and a well drafted order and all eyes are now on the High Court to see if this order will stand the test of law, especially retrospective applicability to earlier financial years,” said Jeenendra Bhandari, Partner, MGB.NFRA on Thursday also barred another Deloitte partner, Rukshad Daruwala, for five years and slapped Rs 5 lakh fine, for his alleged role in IFIN fiasco.While the focus of the regulator seems to be on the big four auditors—Deloitte, PwC, EY and KPMG—some of the Indian firms have also come under the scrutiny. NFRA has also put Chaturvedi & Shah, under its scrutiny for the auditor’s role in DHFL fiasco.Industry watchers say the big question now facing NFRA is that will the regulator investigate the 30 plus top Indian audit firms too which were involved in auditing scores of subsidiaries of the fraud-ridden company or focus largely on the Big Four firms.