Aug 14, 2024 Some positive changes by audit firms, but a lot more needs to be done: Ajay Bhushan Pandey

The National Financial Reporting Authority's ongoing inspections of major audit firms have prima facie revealed some audit quality issues, for which the regulator is in talks with them, NFRA chairman Ajay Bhushan Prasad Pandey has said. The top five audit firms - BSR & Co, Deloitte Haskins & Sells, SRBC & Co, Price Waterhouse Chartered Accountants, and Walker Chandiok & Co LLP - that were inspected last year have introduced some positive changes, but a lot more needs to be done, Pandey told ET's Banikinkar Pattanayak in an interview. Edited excerpts: What is the status of your annual inspection of audit firms this year? Do you notice any change this time around in the standards and processes followed by the auditors you inspected last year? In this round of inspection, we have divided our work into two parts. First, we have taken some firms that were not inspected by us last year as per our rotation policy.

Jul 15, 2024 Talent crunch hits Big Five audit firms as CAs opt for safer avenues

The Big Five audit firms in India are facing a talent crunch. A regulatory clampdown and a higher number of “relatively safer” career opportunities elsewhere are pulling chartered accountants (CAs) away from the audit profession. A senior partner at a Big Five firm told FE that the auditing verticals in top firms are operating with 20% lower staff than the required strength. At present, the top five firms have around 12,500 people in their audit function. “The amount of work is increasing every year but the staff strength is not growing as fast. Although we need to increase the capacity to handle the additional work and deal with the regulatory oversight, getting the right workforce has certainly become a challenge,” said audit vertical head at a Big Five firm. Another partner in the same firm said that the talent crunch is largely due to heightened regulatory scrutiny and because of the expanding opportunities beyond the traditional audit. “When I completed my CA in 1980s, there were fewer avenues. But young CAs today have a vast number of opportunities, and unless somebody is passionate about auditing, most of them usually land up somewhere else,” he said.

Feb 21, 2022 

The government is looking to ban statutory auditors from taking up non-audit work on �public interest� companies � which means those that are listed or are above a certain threshold � and their subsidiaries.

Besides, it is exploring the possibility of joint audit for certain companies as part of the amendments to the Companies Act, for which a Bill is planned to be introduced during the Budget session of Parliament that reconvenes next month, sources told TOI. The ministry of corporate affairs (MCA), which will pilot the Bill, is currently engaged in consultations and is yet to decide the final details of the legislation, which will also need inter-ministerial discussion and a go-ahead from the Union Cabinet.

While both the issues � joint audit and ban on non-audit work by audit firms � have been discussed in the past, the government has been reluctant to legislate on the issue principally due to opposition from chartered accountants, a powerful interest group.

Statutory auditors get a breather on NFRA-2 form

Mar 11, 2020 

Statutory auditors have been given more time to file their form NFRA-2 � which specifies the format of annual return � for financial year 2018-19 with the National Financial Reporting Authority (NFRA), the independent audit regulator.

They can now file this form within 150 days from the date of its publication on NFRA�s website i.e., 150 days from December 9, when it was published on website.

It may be recalled that the corporate affairs ministry (MCA) had, in December last year, given a breather for statutory auditors who were earlier required to file the NFRA-2 form with NFRA by November 30.

It had then said that the form NFRA-2 could be filed with NFRA within 90 days from the day on which it was published on the website of the authority.


This meant that auditors had time till March 9 to file the comprehensive annual return for 2018-19. Now, this time limit has been extended by two more months � by May 9, this form has to be filed.

One of the reasons for extending the timeline in November 2019 was that the NFRA came up with the format very late and closer to the November 30 deadline. As the information sought was quite extensive, more time was required and representations were made to the MCA to extend the last date of filing, sources said. Even with the revised deadline of March 9, auditors are not able to provide comprehensive information that is sought to be obtained by the regulator.

Govt to review regulations of audit services, floats paper

�         Feb 10, 2020 

The ministry of corporate affairs (MCA) has floated a consultation paper seeking to review regulations of audit services and business with a view to enhance independence and accountability of audit firms. It will explore ways to check concentration of audit services with a few firms and to analyse its impact on economy.

Stricter reporting regime coming soon for auditors

The Ministry of Corporate Affairs (MCA) is expected to take a major step to revamp the auditor�s report that accompanies company balance-sheets, placing more onus on statutory auditors to fulfill their professional responsibilities. The move is expected in February.

Jan 28, 2020 

Besides overhauling the Companies Auditors Report Order (CARO), the government is also likely to make changes to the secretarial audit reporting that is mandated under the company law, sources said.

The entire effort will be to provide early-warning signals to policy-makers and regulators of impending disasters in corporates, they said.

Indications are that the MCA may even ask statutory auditors to digitally file the new CARO instead of waiting for the auditor report to form part of the annual report.

The aim is to tighten the working of auditors and also push managements to conform to more elaborate disclosures on their state of affairs.

Auditors get 90 days to file NFRA-2 form

 Dec 13, 2019 

The Corporate Affairs Ministry (MCA) has given a breather for statutory auditors who were earlier required to file the NFRA-2 form with the National Financial Reporting Authority (NFRA) by November 30. It has now allowed the form � which specified the format of the Annual return � to be filed with the new independent audit regulator NFRA within 90 days from the day on which it was published on the website of the Authority. With December 9 as the date on which form NFRA-2 was published on the Web site, auditors will have time till March 9 to file the form, said experts in the audit fraternity.

Sebi lays down stricter norms for statutory auditors

�         Oct 19, 2019 

Regulator Sebi on Friday put in place stricter norms for auditors, including prompt disclosures about reasons for their resignation and requirement to approach chairman of audit committee directly in case of any concerns with management of the firm concerned

CA Institute open to allow UK, Canadian professionals provide audit services in India

02 January, 2023

Central Council approves draft market access offer of India in auditing and accounting services.The CA Institute is now open to offer market access in auditing services to audit and accounting professionals from the UK and Canada. 
The Central Council of the Institute of Chartered Accountants of India (ICAI) has at its recent meeting approved a draft market access offer from India in the ongoing  negotiations on trade in services with its FTA Partners � The UK and Canada.
 

02 Janurary, 2023

The CA Institute has come up with a revised implementation guide to the auditing standard (SA230) on �audit documentation�. 

This has been done to provide practical implementation guidance to auditors on this standard. The implementation guide was last issued in 2018. 

Auditors' red flag in time could have averted many financial misdoings: NFRA chief

31st December,2022

Many financial misdoings could have been detected and averted at an early stage if the auditors concerned had pointed out such instances to stakeholders in time, a top NFRA official has said. The National Financial Reporting Authority (NFRA) was set up in October 2018 and has more than 8,000 listed and other companies under its purview.

"Not only in hindsight but otherwise also, I believe that had many of the violations that we observe in our proceedings been pointed out by the auditors to the shareholders and other stakeholders in time, many of the financial misdoings could have been detected and averted at an early stage," NFRA Chairperson Ajay Bhushan Prasad Pandey told PTI in an interview.

US SEC heightening scrutiny of auditors' crypto work : report

29TH DECEMBER,2022

The US Securities and Exchange Commission (SEC) is heightening the scrutiny of the work audit firms do for cryptocurrency companies, a senior official of the regulator told the Wall Street Journal. "We're warning investors to be very wary of some of the claims that are being made by crypto companies," said Paul Munter, SEC's acting chief accountant in an interview with the journal.
The SEC did not immediately respond to a Reuters request for comment on the report. The development comes as the implosion of FTX has rippled across the industry, hobbling liquidity at firms with exposure to what was once one of the world's biggest crypto exchanges, and has prompted investigations by regulators in several countries. Last month, FTX filed for US bankruptcy protection and its founder Sam Bankman-Fried resigned as chief executive, after rival exchange Binance walked away from a proposed acquisition.

Use third party validation to check fraud: Sebi chairperson Madhabi Puri Buch to auditors

19th December,2022

Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch nudged auditors to use technology-driven third-party validation in the auditing process in order to check fraud. "Sebi's thrust on third-party validation is driven by the commitment to ensure a true and fair picture of whatever is presented in the markets," Buch said while addressing auditors at an event organised by the Indian Audit and Accounts Department.

Buch said there are more than 20 websites in the country which auditors can use to validate the claim of the auditee.
While technology is being used as a tool by fraudsters, we can use the same technology to evade fraud. Auditors can use tools like GSTN portal, bank websites etc. for doing a third-party validation," she said

SC extends medical bail of ex-statutory auditor of Amrapali Group

19th December,2022

The Supreme Court  extended the medical bail of the former statutory auditor of the Amrapali Group of Companies, once a real estate giant but now embroiled in a string of court battles over undelivered housing projects. A bench of Justices Sanjay Kishan Kaul and Abhay S Oka took on record the report of petitioner Anil Mittal submitted by the medical board constituted by the AIIMS.

"Counsel for the petitioner states that the counsel who has to address submissions is on his legs in a part-heard matter and ASG appearing on the opposite side was informed though the adjournment letter is not before us

NFRA BEGINS INSPECTIONS OF FIVE AUDIT FIRMS

18th December,2022

The National Financial Reporting Authority (NFRA), the country�s sole independent audit regulator, has started inspections of five audit firms. NFRA Chairman Ajay Bhushan Pandey said the inspections will take three weeks to complete and a draft report is expected before financial year end.

In November, NFRA had stated in its guidelines that inspections are intended to identify areas and opportunities for improvement in the audit firm�s system of quality control. Inspections will consist of firm-wide review of audit quality (SQC 1) and individual file reviews on test-check basis to evaluate the level of compliance with applicable auditing standards and quality control policy and processes. 

42% small businesses, startups finding it difficult to file tax return, audit report by Sep 30 deadline: Survey

Sep 27, 2022

Ease of doing business for MSMEs: A pan India survey of small businesses and startups by community social media platform LocalCircles on Monday said 42 per cent of 5,788 respondents are finding it difficult to meet September 30 deadline to file their tax return and audit report. 16 per cent of respondents said �it will be a significant effort� filing by this month-end while 26 per cent admitted it would be �impossible to file� by September 30 and hence requested an extension by 30-45 days. In contrast, 49 per cent of respondents said they have already filed their tax returns and audit reports.

Government extends deadline for filing tax audit report till Oct 7

• Oct 01, 2022
  

  The income tax department extended the due date for filing tax audit reports for fiscal 2021-22 by 7 days till October 30."On consideration of difficulties faced by the taxpayers and other stakeholders in the filing of various reports of audit for the Assessment Year 2022-23, Central Board of Direct Taxes (CBDT) has decided to extend the due date for filing of various reports of audit for the Assessment Year 2022-23, which was 30th September 2022 to 07th October 2022," an official statement said.Under the income tax act, those taxpayers who need to get their accounts audited by a chartered accountant are required to file the tax audit report with the I-T department by September 30.