Auditors will be the harbinger of change in the new financial world order: Former SEBI Chairman

Tuesday, October 27, 2020

New Delhi, October 27 2020
: The responsibility of the auditors have increased tremendously in the present COVID times due to the changing business dynamics and the present auditing system is getting more rigorous to be on par with the global accounting standards, stated the Padma Bhushan  awardee and former SEBI chairman, D R Mehta at the Global 2-day Virtual conference- Audit, Risk, and Governance- Emerging Trends, Current Challenges, and Way Forward organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM). Shri Mehta was the chief guest of the event.
Speaking to participants from all across the world, Shri Mehta stated that an auditor is under great pressure due to the adverse publicity that the company may get because of his actions. “There are several challenges that need to be addressed at the juncture. We need to ensure that real scrutiny takes place and at the same time also give some comfort to the auditor to ease the pressure,” he added.
According to Shri Mehta, many auditors also accept jobs in the same corporate firm where they are conducting the audit. “This negates the idea of an independent audit. This issue needs to be addressed. Also earlier, auditors for banks used to be appointed on the recommendation of the controller and auditor general. The Reserve Bank of India changed the appointment process, and it is now done on the recommendation of the bank’s chairman,” He pointed.
He added that due to this, auditors are forced to toe the line taken by the top management. “If they don’t do that they won’t be appointed in the coming year. This would lead to scams and frauds in the banking system,” he added.
Shri Mehta also welcomed the use of technology due to the increase in digital transactions. “The system has improved a lot and there is an increase in professionalism,” he said.
CA Atul Kumar Gupta, president of the Institute of Chartered Accountants of India in his keynote address explained that the economy transforms itself every ten years and it uses the auditing system to remain relevant. “10 years ago we were handling queries related to service tax and excise duty. Today we are handling GST which is relevant in 160 plus countries and IRFS which is present in 170 countries. The Indian auditors have been guiding the industry players in global jurisdiction today,” he said.
He informed that a lot of changes have taken place in the last several years. “Earlier when initial public offering used to take place, there was a different kind of treatment for assets in which 99 percent were tangible. Today a lot of assets are intangible, so the auditors need to adept differently,” he pointed out.
CA Gupta also stated that the Institute of Chartered Accounts has also undertaken the task to educate the new generation of auditors. “We have programs designed from 15 days to six months on data analytics. We also have auditors working pro bono for MSMEs helping them with financial literacy. Chartered Accountants are the financial frontline warriors in such difficult times and are providing assurance services to the investors and stakeholders,” He added.
Mr. Vineet Agarwal, Senior Vice President, ASSOCHAM and managing director of TCI group explained that the auditor profession was already facing a lot of trust issues and the COVID-19 situation made their job all the more difficult. “The virus has brought forward a new set of issues but there are also some new emerging opportunities that we witnessed. The auditors need to adopt new methods and emerging tools in order to conduct remote audits in the future because of the novel coronavirus situation,”.
According to Mr. Agarwal, the present situation has increased the importance of risk management. “The current crises have created disruptions in the supply chain models. It is even more critical for companies to manage risk at such a difficult period,” .
CA Karan Bafna, Country Head, India, Confirmation stated that the situation has changed the way we work. “There would be extensive use of technology for every auditing practitioner. Box files would be replaced by cloud files and onsite audits would be replaced by remote audits. We have all adopted the new normal or some are still in the process of adapting the change,” he stated.
Preeti Malhotra, chairperson, ASSOCHAM National Council on Corporate Affairs, Corporate Governance, and CSR stated that there is a global debate on the role of the auditor in fraud detection. “Shareholders rely on the audited statements majorly looking for clarity and make strategic decisions going forward and feel cheated if the details come out to be untrue. So there is a huge responsibility on the auditors,” She stated.
She explained that there is increased pressure on the auditor due to the present situation. “Auditors will have to adopt technology for the future for auditing purposes due to a shift towards digital auditing,” she said.
ASSOCHAM initiated its endeavour of value creation for Indian industry in 1920. It was established by promoter Chambers, representing all regions of India. Having in its fold over 400 Chambers and Trade Associations, and serving over 4.5 lakh members across India. ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the Knowledge Based Economy. More information available on
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Manju Negi            
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