Reforms in Appointment of Statutory Auditors on the Cards: ICAI develops Software

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In the light of recent controversies on NPAs and frauds from audit perspective, changes are expected in the area of appointment of statutory auditors as the Institute of Chartered Accountants of India ( ICAI ) is taking all the possible measures to revamp the present mechanism.

The ICAI President CA. Naveen N. D. Gupta recently said in a statement while addressing the Members that the meeting of Expert Committee on NPAs and Frauds, constituted by RBI under the Chairmanship of ICAI Past President and NACAS founder Chairman CA. Y. H Malegam, held in Mumbai, the ICAI representatives had submitted their suggestions.

They recommended that autonomy with regard to the appointment of statutory auditors should be reversed. The role and effectiveness of various types of audits conducted in banks in mitigating the incidence of divergence and frauds cannot be overlooked. Accordingly, we suggested that the scope of bank-branch audit should be enlarged. We also stressed that not all bank branches are being subjected to statutory audit, and discussed the issues that included the appointment of statutory auditors by banks, concurrent audit to be done by CAs and uniformity be maintained for appointment, remuneration to be linked with scope of work, banks to have robust appraisal and an effective credit monitoring mechanism, among others,” ICAI Chief said on Tuesday.

He also pointed out about a software developed by ICAI regarding the appointment of statutory auditors and implementation of UDIN which was also briefed before the committee.

“This can randomly map the statutory auditors associating them with the available vacancies in the public-sector banks. This year, three banks, namely Syndicate Bank, Dena Bank and Oriental Bank of Commerce, have used the software for the first time and submitted a positive feedback. We have conveyed to the Expert Committee that other banks should also be encouraged to use our software,” he said.

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