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Audit Profession under Great Pressure - Uday Kotak
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Tighter regulations and lower fees are making the auditing profession challenging, said panelists at an international conference held by the National Financial Reporting Authority (NFRA) here on Tuesday. “The business model of pure audit is under significant pressure. It’s getting tighter and tighter from the point of avoiding conflict,” said Uday Kotak, former managing director and CEO of Kotak Mahindra Bank.
Stating that regulators would want the best of talent in the auditing profession, he said, they “would have an issue if the quality of talent deteriorates.” If the supply (of talent) drops dramatically, we could have a potential crisis in our growth period as well,” Kotak added.
Meanwhile, the instance of auditors getting penalised by NFRA is on a rise. Not just penalties, auditors are worried about the possible criminal proceedings in case of companies committing frauds. For instance, last May, the Supreme Court allowed the Serious Fraud Investigation Office (SFIO) to resume criminal proceedings against IL&FS auditors — Deloitte Haskins and Sells LLP and BSR & Associates LLC — for their alleged role in the financial fraud at the NBFC.
NFRA chairman Ajay Bhushan Pandey said that despite being in a high-pressure job, the auditors in India are not well compensated. “I have seen a few companies which are listed at both the NYSE and Indian stock exchanges. If you see the difference in the auditing fees that the auditor gets abroad versus the amount the auditor gets in India, there’s a vast diffetence. I don’t understand this because the job is almost the same.
He said that the auditors in India have to work in a very hostile environment. “The auditors are expected to display professional scepticism, but the moment they start exercising it, some managements resist. The auditor who are undertaking this job should be fairly compensated,” said Pandey.
Stating that regulators would want the best of talent in the auditing profession, he said, they “would have an issue if the quality of talent deteriorates.” If the supply (of talent) drops dramatically, we could have a potential crisis in our growth period as well,” Kotak added.
Meanwhile, the instance of auditors getting penalised by NFRA is on a rise. Not just penalties, auditors are worried about the possible criminal proceedings in case of companies committing frauds. For instance, last May, the Supreme Court allowed the Serious Fraud Investigation Office (SFIO) to resume criminal proceedings against IL&FS auditors — Deloitte Haskins and Sells LLP and BSR & Associates LLC — for their alleged role in the financial fraud at the NBFC.
NFRA chairman Ajay Bhushan Pandey said that despite being in a high-pressure job, the auditors in India are not well compensated. “I have seen a few companies which are listed at both the NYSE and Indian stock exchanges. If you see the difference in the auditing fees that the auditor gets abroad versus the amount the auditor gets in India, there’s a vast diffetence. I don’t understand this because the job is almost the same.
He said that the auditors in India have to work in a very hostile environment. “The auditors are expected to display professional scepticism, but the moment they start exercising it, some managements resist. The auditor who are undertaking this job should be fairly compensated,” said Pandey.
Category : Auditing | Comments : 1 | Hits : 3537
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sreelatha s kumar
09-Mar-2024 , 11:12:34 amTrue sir