On May 4, 2020 The Ministry of Corporate Affairs(MCA) has constituted a 7 member committee to examine the comments received on the consultation paper floated by it & make recommendations which require any amendments in law, rules and standards so as to enhance audit independence and accountability.
- The panel has been asked to submit its report by June 30.
i.The consultation paper sought to address 5 “threats” for auditor independence- self interest, self-review, advocacy, familiarity and intimidation.
ii.Comments were requested to make joint audit mandatory for bigger companies, whether the number of audits under one audit firm/auditor be reduced and whether the number of partners under one audit firm be reduced or fixed.
iii.Coveted views on whether the holding company’s auditor must also review the working papers of auditors of the subsidiary and make a mandatory comment on the account of subsidiary companies.
iv.The committee members are Amarjit Chopra, Past President of Chartered Accountants(CA) Institute; KVR Murty, Joint Secretary, MCA; PR Ramesh, former Deloitte India Chairman; Ajay Bahl, Co-Founder & Managing Partner, AZB Partners; Sridhar Pamarthi, Joint Director, MCA; NK Dua, Joint Director, MCA, and Atma Sah, Deputy Director, MCA.
MCA earlier in 2020 has come up with a 20-page consultation paper to seek comments from government departments and regulatory agencies, besides others, by February 28 on wide issues which affect audit independence which includes, the following:
- A proposal to prohibit audit firms from providing non-audit services to their clients,
- How to address the oligopoly of ‘Big4’ audit firms (economic concentration of audit)
- Make the National Financial Reporting Authority (NFRA) prepare a separate panel of auditors for appointment as auditors of listed entities.
Union Minister– Nirmala Sitharaman (Constituency- Karnataka)
Minister of State– Anurag Singh Thakur(Constituency- Hamirpur,HP)