The Institute of Chartered Accountants of India (ICAI) suggested the appointment of Statutory Central Auditors (SCAs) and Statutory Auditors (SAs) of Commercial Banks, Urban Co-operative Banks (UCBs) and Non-banking Financial Companies (NBFCs).
The ICAI added that it always stood for joint audit as the concept.
“We have suggested that RBI itself should appoint the statutory auditors of public sector banks. The current system of bank managements appointing statutory auditors should be done away with,” Nihar Jambusaria, President, ICAI said.
Jambusaria said that CA Institute has suggested to the RBI that instead of prescribing the maximum number of SCAs in public sector banks, the RBI should set the minimum numbers to be appointed. “We have suggested that instead of having a cap, there should be a minimum number and the current absence of minimum number is leading to reduction in overall number of auditors in PSBs,” he said.
“Harmonising norms for appointment of auditors of various entities in the financial sector, such as Private Banks, NBFCs, UCBs, HFCs is the right step towards ensuring independence and transparency in the selection of auditors resulting in enhanced audit quality,” Jambusaria added.
ICAI stated joint audits always worked well for improving audit quality and reliability apart from having fresh perspectives from new firms. The body stated further, the joint audit will ensure due continuity in the audit process as one of the firms is continuing during rotation.
“It has an advantage of utilising technical expertise pooled in from participating firms. This also enables each of the joint auditors to focus better on its area of expertise and mitigate systemic risk.”
According to ICAI, presently only 10 per cent of the eligible CA firms are appointed as SCAs and with the relaxed norms, the number of eligible firms is expected to increase by three times. This will help the corporates to choose their auditors from a larger pool from a location of their choice.
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