MCA starts comprehensive review of auditing standards regulations

MCA secretary Manoj Govil urged the corporate sector, including the CEOs and CFOs to improve upon the level of public trust within the business ecosystem as preparers of financial statements

The Ministry of Corporate Affairs (MCA) has started a comprehensive review of its regulations, including audit and accounting, through an extensive public consultation process, MCA secretary Manoj Govil said on Tuesday.

Speaking at a conference organised by the National Financial Reporting Authority (NFRA), Govil said MCA is also engaging with the Institute of Chartered Accountants of India (ICAI) to achieve the vision of having India’s own homegrown big audit firms. 

He urged the corporate sector, including chief executive officers (CEOs) and chief financial officers (CFOs), to improve upon the level of public trust within the business ecosystem as preparers of financial statements. 

Govil said the government has been working on developing a vision and making a roadmap to achieve the target of Viksit Bharat 2047 with the aggregate size of the economy touching $30 trillion.

“The corporate sector must play a pivotal role in the implementation of this vision. This role comes with major responsibility and public accountability. The sector will need to improve upon the level of public trust to play its rightful role,” Govil said. 

He highlighted the need for robust regulatory structures and frameworks to protect the interests of domestic as well as international stakeholders. The MCA secretary said, “Transparency of financial reporting and high quality of audits have a crucial role in inspiring investor confidence, facilitating informed decision making and fostering a culture of trust and credibility within the business ecosystem.” 

He said MCA has been steadfast in its efforts to strengthen the regulatory frameworks and enhance compliance standards. 

Govil also said that issues related to audit quality, reflected in various orders and inspection reports of NFRA, have helped the stakeholders gain a better understanding of the dimensions and impact. 

NFRA chairman calls for building trust in financial reporting

Stressing the need for building trust in financial reporting, capital markets and regulatory systems, NFRA chairman Ajay Bhushan Pandey said that independent regulators and high-quality financial reporting frameworks are needed for the financial and capital markets. 

Commenting on NFRA’s journey, Pandey said the authority started with focus on enforcement rather than ‘supervisory approach’ as the prevailing scenario demanded that kind of treatment. 

Addressing the two-day conference on ‘Transparent Financial Reporting and Audit Quality: Pillars of Corporate Governance’, Pandey said, “Those who have gathered here have a huge responsibility to contribute to the protection of interest of investors and shareholders in larger public interest. This must be in a manner we perform the watchdog function — be it the audit committee, independent directors, corporate management, investor forums, auditors and independent regulators.”