Cabinet likely to discuss tighter norms for auditors

Perturbed over the spate of banking frauds, the Union Cabinet is likely to consider tomorrow measures to strengthen the regulatory regime for auditors to prevent such incidents in the future.
The Cabinet headed by Prime Minister Narendra Modi will be meeting again tomorrow and is reported to have only one item on the agenda, sources said.
According to them, the meeting may consider setting up of National Financial Reporting Authority (NAFRA) as envisaged in the Companies Act, 2013.
NAFRA will look into accounting and auditing standards, among others.
With the Rs 12,700 crore fraud at Punjab National Bank also bringing the role of auditors into focus, the corporate affairs ministry is keen to push NAFRA, sources said.

While most provisions of the new Companies Act came into force from April 1, 2014, the section pertaining to NAFRA is yet to be implemented.

Last week, Finance Minister Arun Jaitley expressed his displeausre over laxity in the regulatory oversight by auditors in the backdrop of the scam at Punjab National Bank.
"Both internal and external auditors really have looked the other way or failed to detect," said Jaitley, who is also the Corporate Affairs Minister.
Chartered accountants and those who control the discipline, should start introspection and "say what legitimate actions are to be taken", he had said.
Yesterday, the finance ministry asked all state-owned banks to scrutinise NPA accounts above Rs 50 crore for possible fraud and accordingly report the matter to CBI.

The CBI today arrested auditor of Punjab National Bank in the fraud, mainly perpetrated by jewellers Nirav Modi and Mehul Choksi in connivance with the bank officials.
Besides Punjab National Bank, several other lenders, including Bank of Baroda, Oriental Bank of Commerce and Corporation Bank, have reported instances of frauds.
In the Rs 12,700 crore fraud case, chartered accountants' body Institute of Chartered Accountants of India (ICAI) has issued show cause notices to the auditors of Punjab National Bank and Gitanjali Gems.