Proposes several changes to check rampant resignations
As part of its efforts to rid Corporate India of scams and frauds fuelled by financial opaqueness, SEBI is turning up the heat on auditors by making them more accountable. Financial auditors of a company will now not be able to casually resign without finalising the audit report for the full year if they have signed previous quarterly reports. Besides, the auditors will have to provide proper reason for resignation and would have to state if the company was not sharing proper financial numbers for audit purpose.
All these proposals are part of a consultation paper that SEBI put out on Thursday for public comments. This comes amid a spate of exits by auditing companies. Recently, BSR & Associates, part of global accounting firm KPMG’s network in India, had resigned as an auditor of IL&FS Financial Services, which is being probed for alleged financial irregularities. PwC too had resigned as the auditor of Reliance Capital and Reliance Home Finance and Deloitte Haskins and Sells LLP had tendered resignation as the auditor of Fortis Healthcare.
Enhancing public disclosures
“The changes proposed will certainly help in enhancing public disclosures required in case of resignation by auditors,” said Moin Ladha, Partner, Khaitan & Co. “It will also lay down a procedure in case the auditors’ resignation is triggered by significant concerns about a company.”
Source: The Hindu BusinessLine