You are here: Home » Opinion » Editorial » Editorials
Business Standard

Under scrutiny

Auditors need to be reined in, but not through over-regulation

Rbi  |  Sebi  |  Sebi Regulations

Business Standard Editorial Comment 

The (RBI) recently announced that it was tightening rules for statutory audits of banks and that it would take action against auditors if they were found responsible for any lapses in financial statements or audit reports of banks. This is only one of several recent developments that have led to auditors in particular, and accountants in general, becoming wary about misstatements in corporate accounts. The establishment of the National Financial Reporting Authority (NFRA) was cleared by the Cabinet in March. This will be the first independent regulator to oversee the accounting profession, which has never been answerable to any regulatory body other than the Institute of Chartered Accountants of India (ICAI). While the ICAI remains the arbiter of accounting standards and will play a valuable advisory role, the NFRA gains its authority from Section 132 of the Companies Act, 2013. The new regulator would oversee the audits of large companies, listed and unlisted. The government could also refer cases for investigation to it, in the public interest. The NFRA is to be formally established within the next two months and the rules have been notified. The regulator would have the powers to penalise any individual CA or any audit firm. It can levy fines of up to 10 times the fee received, and also debar firms from practising.



What you get on Business Standard Premium?

  • icon Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
  • icon Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
  • icon Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
  • icon Pick your 5 favourite companies, get a daily email with all news updates on them.
  • icon 26 years of website archives.
  • icon Preferential invites to Business Standard events.


Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Mon, July 16 2018. 05:59 IST