Too close for comfort

An analysis of annual reports of listed companies shows several companies continue to reappoint auditors for decades together. While there is no express bar under the present law on this practice, investor advisories and activists have begun to rake up this issue as a possible grey area, following allegations of auditors' involvement in the multi-billion rupee Satyam Computers scam. A significant amount of 'non-audit' work, such as tax consulting, taken up by firms conducting audit also adds to doubts about their independence in performing statutory duties. In the absence of clear-cut legal provisions, advisory firms recommend auditor rotation every six years, with a change in audit partner after every three.(Click on graphic)