New reporting requirements for companies put onus on auditors

Auditors to certify that transactions are not violative of PMLA/FEMA rules, according to ICAI guidelines

Auditors should seek direct confirmation on ‘borrowed funds’ from all entities involved in transactions, including the ultimate beneficiary, to ensure compliance with anti-money laundering laws and foreign exchange rules under new reporting requirements for firms.

In case these entities do not confirm, the auditor may seek external confirmation where the third party provides evidence for the particular matter or amount, according to the new rulebook by the Institute of Chartered Accountants of India (ICAI).

Even a high level of professional scepticism may be considered as alternative audit procedures, by examining the end-use certificate obtained by the management for amounts funded to determine