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The news is most disturbing and most of us seem to have taken it in their stride but being a senior member of the chartered accountant community, the news has shaken me completely. There is an urgent need for everyone in the profession to take stock of the situation and some brain teasing exercise is required to see where we have all gone wrong.
This piece is in no way being written to denounce anyone but aims to smother courage to seriously alarm the professional brothers to watch their fumbling steps and take it as a wake-up call before  the worse happens.  
In the words of an official of MCA the report does not suggest anything revolutionary and has no meaning! The Companies Bill is expected to be lying down stricter norms for the auditors with name of the errant auditors made public. The role of auditors is being defined for regulation of the profession tightly.
What it really means to me is that we have lost a very good opportunity to show our prowess and our expertise in unearthing the concealed tale and other compelling factors, most of which was  already uncovered by investigating agencies. Our report should have divulged something that was not so far said and must have suggested some ways and means to curb such manipulations by appointment of joint auditors or another peer review of such large concerns from the pool of auditors besides the statutory auditors, best of which are already there and are not pampered. The MCA should have been suggested to form the panel like the one which is there for RBI though if we believe what the current scenario is, the same is being sidelined by allowing the bank’s respective board of directors to appoint the auditors of their choice.
You can peep in to the ICAI’s Journal of August, 2010 month for this piece. This is baffling news that is doing no good to the advancement of the profession and I am sure our esteemed body is trying their best to suggest ways to overcome such a situation.
The core banking solution does not rule out the role of audit but at the same time it may need the documentation part at the branch to be stronger and the parameters fed by the branch for various service charges, interest rates and the classification of the borrower correctly would still be a task that would require the overall checks and controls besides the tax audit and monitoring of NPAs etc.
Is it not possible to detect frauds even though we may call this as the duty of the management in the first place but from my experience I can say if an auditor is aware of the mechanism of how a particular industry is run, the detection becomes little easier. Therefore there is need to call for paper or notes or study on the frauds that are detected by the auditors and their mechanism and manner in which these have been committed and sharing the same with the professionals. The report of the RBI and the banks also cover the modus-operandi.  
Are we really ready to face the onerous task that lies ahead on the most treacherous path onset with too much expectation by the regulators by coming out of the orthodox role in the spate of events that are reported and being confronted? The answer to that would lie in the way in which we adapt ourselves quickly to the newer role and being more vociferous in reportage to the stake holders be it shareholders, the financial institutions or the regulators.

Published by

Vijay Kalia
(Chartered Accountants)
Category Audit   Report

  39 Shares   11778 Views


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