Constitution of Expert Group by MCA to look into issues concerning Indian Audit Firms; Report Submission extended to 15 Jan. 2017
MCA has constituted an expert group to address audit rotation issues raised by the domestic/ Indian CA firms, including review of restrictive conditions imposed by foreign investors with regard to auditor appointment; Expert Group to Report by 15 Jan. 2017.
1. Several audit firms have represented about adverse impacts on Indian audit firms due to the structuring of certain audit firms leading to circumvention of various regulations, manner in which auditor rotation requirements is being implemented by companies, and imposition of restrictive conditions by foreign investors with regard to auditor appointment by companies. In order to examine the above and related issues and make suitable recommendations to the Government, an Expert Group consisting of the following members is hereby constituted:-
i) Shri Ashok Chawla, Chairman TERI, former Finance Secretary and CCI, Chairman (Chairperson)
ii) Shri Hari S Bhartia, Co-Chairman & Managing Director, Jubilant Life Sciences Limited and past President CII (Member)
iii) Shri N. S. Vishwanathan, Deputy Governor, Reserve Bank of India (Member)
2. The Expert Group may invite or co-opt subject matter experts relating to audit of books of accounts and financial statements, as needed. The Expert Group may give an opportunity of being heard to key stakeholders.
3. The Expert Group would examine and give its recommendations, inter alia, on:
(i) Whether there is an adverse impact on Indian audit firms from restrictive shareholder covenants?
(ii) Whether there is an adverse impact on Indian audit firms through the manner in which audit rotation is being implemented by companies?
(iii) Whether joint audit could be introduced in cases where there are restrictive covenants and / or in other specified cases where there is a multi-national audit firm as the auditor?
(iv) If joint audit is to be implemented, then the legal and regulatory steps towards the same.
(v) Practices in other large emerging market economies in relation to domestic audit firms / joint audit.
(vi) India, as a global power in services, should aspire to have its own audit firms at international level. What measures can be taken to promote creation of international-level Indian audit firms which provide services outside India, particularly in developing countries, in competition with multi-national accounting firms?
5. The Expert Group shall complete its work and submit its report
within two months of this Order. (extended to 15 Jan. 2017).
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