ICAI red-flags auditor selection process at PSU banks
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Raising concerns, the chartered accountants’ apex body Institute of Chartered Accountants of India (ICAI) has said the current process for selecting auditors at public sector banks could compromise their “independence” in carrying out the auditing job.
ICAI has conveyed its concerns on the issue to the finance ministry and the Reserve Bank of India (RBI), among others.
Under the current process, a public sector bank’s management and audit committee are empowered to select the auditors. A panel used to appoint the auditors earlier.
Emphasising that banks should be more careful while appointing auditors, ICAI President Manoj Fadnis said the lenders need to design systems for ensuring transparency in the whole process.
“In the autonomy granted to banks for the appointment of central statutory auditors, we have a lot of concerns... The process followed by them needs a lot of refinement,” Fadnis told PTI in an interview.
The ICAI president, stressed that a greater independence of auditors is always “desirable”.
“What we believe is that the entire procedure will have to be implemented more carefully and the banks would have to design more systems for transparent method for appointment of auditors.”
Fadnis said the appointment of auditors is of great importance to ensure their independence is not compromised.
The new system is being followed pursuant to the finance ministry and RBI recently deciding to grant autonomy to public sector banks with regard to appointment of auditors. There are 27 public sector banks in the country.
In the earlier system, an auditor was selected by a committee with representations from the finance ministry, Comptroller and Auditor General and the Indian Banks’ Association.
Noting that appointment of auditors by the management is “not a desirable situation”, Fadnis said the earlier selection process through the committee was transparent and better.
“Now, suddenly this year the decision has been given to the banks. So the banks’ management and audit committees have been given the powers to appoint the auditors,” he noted.
Some appointments of auditors under the new method has already been made.
On the response from the finance ministry and RBI about concerns raised by ICAI, Fadnis said they were waiting to see the results.
"We have expressed our concerns to the Finance Ministry and RBI and we are told that this year they have carried out the methodology and are looking at the results, in the sense that how the process was carried out," Fadnis said. (Business Standard)
ICAI has conveyed its concerns on the issue to the finance ministry and the Reserve Bank of India (RBI), among others.
Under the current process, a public sector bank’s management and audit committee are empowered to select the auditors. A panel used to appoint the auditors earlier.
Emphasising that banks should be more careful while appointing auditors, ICAI President Manoj Fadnis said the lenders need to design systems for ensuring transparency in the whole process.
“In the autonomy granted to banks for the appointment of central statutory auditors, we have a lot of concerns... The process followed by them needs a lot of refinement,” Fadnis told PTI in an interview.
The ICAI president, stressed that a greater independence of auditors is always “desirable”.
“What we believe is that the entire procedure will have to be implemented more carefully and the banks would have to design more systems for transparent method for appointment of auditors.”
Fadnis said the appointment of auditors is of great importance to ensure their independence is not compromised.
The new system is being followed pursuant to the finance ministry and RBI recently deciding to grant autonomy to public sector banks with regard to appointment of auditors. There are 27 public sector banks in the country.
In the earlier system, an auditor was selected by a committee with representations from the finance ministry, Comptroller and Auditor General and the Indian Banks’ Association.
Noting that appointment of auditors by the management is “not a desirable situation”, Fadnis said the earlier selection process through the committee was transparent and better.
“Now, suddenly this year the decision has been given to the banks. So the banks’ management and audit committees have been given the powers to appoint the auditors,” he noted.
Some appointments of auditors under the new method has already been made.
On the response from the finance ministry and RBI about concerns raised by ICAI, Fadnis said they were waiting to see the results.
"We have expressed our concerns to the Finance Ministry and RBI and we are told that this year they have carried out the methodology and are looking at the results, in the sense that how the process was carried out," Fadnis said. (Business Standard)
Category : ICAI | Comments : 4 | Hits : 2397
Comments
CASANSAAR
06-Apr-2015 , 10:54:00 amWe appreciate the red flag raised by ICAI w.r.t. the allotments made by PSU managements. But it is too late as we have lost the opportunity to get the allotment this year due to wrong policy of allotment.For the mid size firms which are depending upon the bank audits for their existence, it is painful to see no allotments even after the completion of cooling period.
CASANSAAR
06-Apr-2015 , 05:12:26 pmICAI Red Flags PSBs' Process of selecting Auditors ' ( Refere ET. Dated 06/04/2015 ) , Why the delay about raising concerns to the Chartered Accountants Apex body ICAI ? Our President CA. Manoj Fadnis stated that ICAI has conveyed its concern the issue to the Finance Ministry and RBI among others . Under current process , a public sector bank's management and audit committee are empower to sel
CA.Subhash Chandra Podder
06-Apr-2015 , 05:16:43 pmThis to bring to your kind attention that I am in the continuous profession since 1971 ( either as a Partner of a leading firm in Kolkata up to the year ended 1993 , then as a proprietor from the year 1994 to till date 06/04/2015 in the firm “ S.C.Podder & Associates , Chartered Accountants , “ that is in profession for more than 44 years . During my long association with the Institute as a pra
CA. VISHAL GOEL
06-Apr-2015 , 08:05:33 pmMy 15 Years old firm which is also a partnership firm has not got audit for the continuing 3rd year even after being DISA qualified partner and also done the Concurrent audit course.it looks that The Process of selection is now not transparent and justified for all.it really hearts that inspite of all the qualifications no audit is being given to our firm. CA. VISHAL GOEL,BAREILLY