The Ministry of Corporate Affairs (“Ministry”) has, through a Notification dated 6th February 2020, issued a Consultation Paper to examine the existing provisions of law and make suitable amendments to enhance audit independence and accountability and has sought suggestions/comments on the same.
The suggestions/comments on the consultation paper along with justification in brief may be sent latest by 28th February, 2020 through email at audit.policy@mca.gov.in in the format given below:
Name, Address, Contact No. of Stake holder _____________________________
| SL. No. | Para No. | Suggestion | Justification |
The consultation paper address the following issues:
- Ways to curb threats pertaining to self-interest, self-review, advocacy, familiarity and intimidation for the independence of auditors.
- Problem of economic concentration of audit
- Non-audit services taken by auditors
- Mandatory Joint Audit for bigger companies
- Holding company’s auditor to review the working papers of auditor of subsidiary and make mandatory comment on the account of subsidiary companies
- Feasibility of creation and maintenance of panel of auditors for Non-Government Companies
- Audit Engagement letter – where mandated and assessment of its utility and misuse
- Utilisation of Borrowed funds
- Restriction on number of audit firms a group [Big 4] can have in whole of India
- Disclosure / requirement on Probability of default to be made by the Auditor in his Audit Report
- Requirement of an unlisted company whose parent company is a listed company to submit quarterly returns to Securities and Exchange Board of India
- Development of a ‘Composite Audit Quality Index’ to improve accountability of auditors and audit firms
- Strengthening deterrence of conducting improper audits by inspection of audit engagements in order to ensure auditors are not comprised and perform their independent role effectively
- Untimely resignation of auditors
Source: Ministry of Corporate Affairs
