MCA publishes Consultation Paper to examine the existing provisions of law and make suitable amendments to enhance audit independence and accountability; comments invited till 28.02.2020

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:

  1. Ways to curb threats pertaining to self-interest, self-review, advocacy, familiarity and intimidation for the independence of auditors.
  2. Problem of economic concentration of audit
  3. Non-audit services taken by auditors
  4. Mandatory Joint Audit for bigger companies
  5. Holding company’s auditor to review the working papers of auditor of subsidiary and  make mandatory comment on the account of subsidiary companies
  6. Feasibility of creation and maintenance of panel of auditors for Non-Government Companies
  7. Audit Engagement letter – where mandated and assessment of its utility and misuse
  8. Utilisation of Borrowed funds
  9. Restriction on number of audit firms a group [Big 4] can have in whole of India
  10. Disclosure / requirement on Probability of default to be made by the Auditor in his Audit Report
  11. Requirement of an unlisted company whose parent company is a listed company to submit quarterly returns to Securities and Exchange Board of India
  12. Development of a ‘Composite Audit Quality Index’ to improve accountability of auditors and audit firms
  13. 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
  14. Untimely resignation of auditors

Source: Ministry of Corporate Affairs

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