Govt forms panel to examine issues related to Audit Firms
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Reserve Bank of India (RBI) deputy governor N.S. Vishwanathan and Jubilant Life Sciences Ltd co-chairman and managing director Hari S. Bhartia are the other members of the group.
It will be chaired by Chawla, who is former finance secretary and had also served as Competition Commission of India (CCI) chairman. The corporate affairs ministry has set up the expert panel following representation from several domestic audit firms about negative impact on them on account of various practices that lead to circumvention of regulations.
The group would look at whether there is an adverse impact on “Indian audit firms from restrictive shareholder covenants” and “through the manner in which audit rotation is being implemented by companies”, the ministry said in an order.
According to the order, the panel would examine whether joint audit could be introduced in cases where there are restrictive covenants and other specified cases where there is a multinational audit firm as the auditor.
In case a joint audit is to be implemented, then the legal and regulatory steps towards the same would also be examined. Further, practices in other large emerging market economies in relation to domestic audit firms/joint audit would be looked into. Noting that India, as a global power in services, should aspire to have its own audit firms at international level, the order said the panel would look at measures that can be taken to promote “creation of international level Indian audit firms”.
The panel would look at having such firms which can provide services outside India, particularly in developing countries, in competition with multinational accounting firms. “Several audit firms have represented about adverse impact on Indian audit firms due to the structuring of certain audit firms leading to circumvention of various regulations and imposition of restrictive conditions by foreign investors with regard to auditor appointment by companies,” the ministry said.
The panel has been given two months time to submit its report to the government. If required, the group can invite or co-opt subject matter experts relating to audit of books of accounts and financial statements. #casansaar (PTI - LiveMint)
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