CA Sansaar
NFRA Flags Lapses in Audit Practices of Top Firms, Raises Independence Concerns
Print
India’s audit watchdog, the National Financial Reporting Authority (NFRA), has identified significant shortcomings in the functioning of several leading audit firms, including affiliates of global networks such as Deloitte and Grant Thornton.
In its latest inspection findings, the regulator highlighted gaps in the audit processes of six firms, with particular focus on Walker Chandiok & Co LLP (WCCL), associated with Grant Thornton International (GTIL). The report points to concerns over the firm’s operational independence and its relationship with the global network.
According to NFRA, while GTIL appears to exercise considerable influence over WCCL through its policies, procedures, and strategic decision-making, the Indian firm has not formally acknowledged itself as part of the international network. The regulator noted that such a position could weaken compliance with auditor independence norms laid down under Sections 141 and 144 of the Companies Act, 2013.
The findings further suggest that WCCL aligns closely with GTIL’s global framework, including branding, business strategies, and fee-related decisions. However, its continued denial of formal network affiliation raises questions about transparency and regulatory compliance.
Another key issue flagged in the report is the provision of restricted non-audit services by WCCL and other related entities within the network in India. NFRA termed this a serious concern, emphasizing that even permissible non-audit services must follow strict approval protocols, including clearance from audit committees or boards, while ensuring adherence across all associated entities.
Responding to the observations, WCCL maintained that it adheres fully to applicable independence standards and regulatory requirements. The firm stated that its policies are consistently implemented across its group entities, including Grant Thornton Bharat and Grant Thornton Advisory, and that compliance was demonstrated during the inspection process.
The NFRA’s findings once again bring the spotlight on the governance standards and independence frameworks followed by major audit firms, reinforcing the regulator’s push for greater accountability and transparency in the profession.
In its latest inspection findings, the regulator highlighted gaps in the audit processes of six firms, with particular focus on Walker Chandiok & Co LLP (WCCL), associated with Grant Thornton International (GTIL). The report points to concerns over the firm’s operational independence and its relationship with the global network.
According to NFRA, while GTIL appears to exercise considerable influence over WCCL through its policies, procedures, and strategic decision-making, the Indian firm has not formally acknowledged itself as part of the international network. The regulator noted that such a position could weaken compliance with auditor independence norms laid down under Sections 141 and 144 of the Companies Act, 2013.
The findings further suggest that WCCL aligns closely with GTIL’s global framework, including branding, business strategies, and fee-related decisions. However, its continued denial of formal network affiliation raises questions about transparency and regulatory compliance.
Another key issue flagged in the report is the provision of restricted non-audit services by WCCL and other related entities within the network in India. NFRA termed this a serious concern, emphasizing that even permissible non-audit services must follow strict approval protocols, including clearance from audit committees or boards, while ensuring adherence across all associated entities.
Responding to the observations, WCCL maintained that it adheres fully to applicable independence standards and regulatory requirements. The firm stated that its policies are consistently implemented across its group entities, including Grant Thornton Bharat and Grant Thornton Advisory, and that compliance was demonstrated during the inspection process.
The NFRA’s findings once again bring the spotlight on the governance standards and independence frameworks followed by major audit firms, reinforcing the regulator’s push for greater accountability and transparency in the profession.
Category : NFRA | Comments : 0 | Hits : 37
Comments