Govt to probe Auditor Resignations from listed Indian Companies
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A rush of exit of auditors in the last few months has prompted the ministry of corporate affairs to seek reasons for their departure from the companies with close to 15 cases coming under the scanner.
Since January, close to three dozen auditors have opted out of their assignments in listed companies, resulting in the operations of these companies coming under scrutiny. Sources said that the ministry is asking the auditors to give “full reasons” for their resignation. “If someone says he is quitting for personal reasons, we cannot do much. If somebody says he is quitting due to professional reasons, somebody has to look into it and someone will look into it,” said an official, who did not wish to be identified.
The government reasons that the auditor cannot walk out of an assignment if it finds something amiss. Officials pointed out that the law mandates that the auditor has to submit a report if something wrong comes to its notice and just mere qualification of accounts will not absolve the chartered accountant of his responsibility. In fact, even in cases where investigations have been ordered, the role of the auditors is being probed. Besides, it is being checked if the auditor submitted a report.
Sources said that the government had powers to prosecute errant auditors, indicating that it is taking the cases seriously. “When the conduct of auditor is not very clear, we are seeking a polite letter to find the reasons for premature exit. We are alive to the issue,” the official said.
Auditors are looking to exit companies wherever they fear wrongdoing as they do not want to face action similar to the Sebi audit ban on Pricewaterhouse in the Satyam case. In addition, the fear of action against firms, as opposed to individual chartered accountants currently, by the proposed National Financial Regulation Authority (NFRA) is driving resignations. #casansaar (Source - Times of India)
Since January, close to three dozen auditors have opted out of their assignments in listed companies, resulting in the operations of these companies coming under scrutiny. Sources said that the ministry is asking the auditors to give “full reasons” for their resignation. “If someone says he is quitting for personal reasons, we cannot do much. If somebody says he is quitting due to professional reasons, somebody has to look into it and someone will look into it,” said an official, who did not wish to be identified.
The government reasons that the auditor cannot walk out of an assignment if it finds something amiss. Officials pointed out that the law mandates that the auditor has to submit a report if something wrong comes to its notice and just mere qualification of accounts will not absolve the chartered accountant of his responsibility. In fact, even in cases where investigations have been ordered, the role of the auditors is being probed. Besides, it is being checked if the auditor submitted a report.
Sources said that the government had powers to prosecute errant auditors, indicating that it is taking the cases seriously. “When the conduct of auditor is not very clear, we are seeking a polite letter to find the reasons for premature exit. We are alive to the issue,” the official said.
Auditors are looking to exit companies wherever they fear wrongdoing as they do not want to face action similar to the Sebi audit ban on Pricewaterhouse in the Satyam case. In addition, the fear of action against firms, as opposed to individual chartered accountants currently, by the proposed National Financial Regulation Authority (NFRA) is driving resignations. #casansaar (Source - Times of India)
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