New Delhi : Institute of Chartered Accountants of India (ICAI) said auditors will have to comply with compliance requirements, but it is up to the regulator National Financial Reporting Authority (NFRA) to act on defaults by over a thousand auditors, the latter said in a recent report. has been marked.
ICAI President Nihar N. Jambusaria said that his advice to the chartered accountants was to follow all the mandatory requirements. “There is no doubt about it. Whenever we get the data, we will act on it. We will look into it, but if it is a simple compliance requirement, the NFRA itself will look into it,” Jambusaria said.
The NFRA has nominated over a thousand statutory auditors – who account for a large part of the auditing profession in the country – who have not filed their annual returns for FY 2019 till September 28, which is the highest in India. Paints a grim picture of the auditing profession.
Statutory filings in the NFRA-2 form are required to capture a lot of the finer details of the performance of an audit. It includes registration of a firm, PAN number, details of fee received, details of partners and number of employees. It also includes disclosure of whether the firm has given up an audit assignment or withdrawn its audit report or withdrew its consent to use its name in the report in the past three years. The auditor must also state that it has implemented quality control policies for the reporting period. These details give the audit regulator a general understanding of compliance levels among audited businesses and provide examples in the corporate world that deserve regulatory attention. If an auditor omits an audit assignment, it also draws the attention of the Registrar of Companies.
However, these defaulting auditors can correct their omissions. A person with knowledge of NFRA’s move said, “Default in filing of annual return by the auditors is a compoundable offence.” Compoundable offenses are those in which charges are removed in return for payment of fine.
An email sent to Competition Commission of India (CCI) chairman Ashok Kumar Gupta, who is holding additional charge of NFRA, remained unanswered at the time of publication.
The issue of auditor compliance comes at a time when differences have emerged between audit regulator NFRA and accounting rule maker and ICAI, a self-regulator of the profession, over audit of small companies. NFRA has asked ICAI to conduct a regulatory impact assessment of ICAI’s proposed accounting standard amendment for small businesses, while ICAI maintains that it has conducted a due process of consultation.
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