You are here: Home » PTI Stories » National » News
Business Standard

Only 18% of Indian cos ready for mandatory audit firm rotation

Press Trust of India  |  New Delhi 

There is awareness amongst Indian companies about the new mandatory firm rotation (MFR) requirements, a majority of companies are yet to start planning to comply with the requirements, says a report.

As per a survey by Grant Thornton India in association with Prime Database, 82 per cent of companies in India are yet to start planning or only have an informal plan agreed with the Board of Directors to meet the requirement of MFR, and only 18 per cent have either appointed auditors or have a comprehensive plan in place.

"The survey results clearly show the need for a majority of India Inc to start planning their approach towards Audit Firm rotation early, and not to underestimate the complexity and importance of this generational shift in regulations," Vishesh C Chandiok, National Managing Partner, Grant Thornton India LLP said.

In order to reduce the risks of excessive familiarity and bring in much-needed transparency into the auditing process, the Companies Act 2013 provides for MFR for all the listed and certain classes of unlisted companies, such that audit firms completing a term of 10 years or more need to be rotated beginning April 1, 2017.

Despite the fact that corporate India is not completely ready for the transition, the survey noted that a whopping 78 per cent believe that MFR is a step in the right direction and would lead to improved financial reporting.

It further noted, about 73 per cent of the companies have either already taken steps to comply with the independence requirements of the 2013 Act or are in the process of such compliance.

"MFR is a step in the right direction and will surely result in greater transparency, higher accountability and better corporate governance," said Pranav Haldea, Managing Director, Prime Database Group.

According to Prime Database, out of 1,480 companies listed on the National Stock Exchange, only 131 companies have changed their auditors in the years 2015 and 2016.

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: Tue, July 19 2016. 15:57 IST
RECOMMENDED FOR YOU