The government is planning to tighten reporting norms for auditors to ensure they perform their duties responsibly, BusinessLine reported.

The Ministry of Corporate Affairs (MCA) might tweak the Companies Auditors Report Order (CARO) and the audit reporting standards as mandated under the Companies Act.

The aim is to give policymakers and regulators early warnings of a potential crisis at a corporate. An MCA-appointed committee has already submitted its recommendations and the changes will come into effect from February, the report said.

The intention of the new rules is also to push companies to provide more detailed disclosures about their finances. Auditors have come under criticism over the past year due to lapses in regards to the IL&FS and Dewan Housing Finance (DHFL) debacles.

For the CAROs, the MCA may now ask auditors to file the report digitally, instead of filing it as a part of the annual report. The National Financial Reporting Authority (NFRA) will likely meet at the end of January to decide on changes to the existing CARO.

CARO was last changed in 2016. Auditors hope they get sufficient time to comply with the new norms, unlike in 2016, the report added. #casansaar(Source - MoneyControl, Business Line)