Proactive Initiative Aims to Enhance Auditor Preparedness and Quality Assurance in Evolving Business Landscape
In response to the dynamic shifts in business models, the Institute of Chartered Accountants of India (ICAI) has taken a proactive step by setting up an expert panel to address queries related to statutory audits. This move comes at a crucial juncture when numerous start-ups face regulatory scrutiny and heightened investor concerns over various operational practices.
The decision to establish the expert panel was announced in a recent circular issued by the ICAI, acknowledging the burgeoning responsibilities of auditors amidst evolving regulatory frameworks and the emergence of new-age companies. Spearheaded by Sanjeev Kumar Singhal, Chairman of the Auditing and Assurance Standards Board (AASB), and Vishal Doshi, Vice Chairman of AASB, the panel aims to provide necessary support to chartered accountants in navigating the complexities of statutory audits.
Operating from April 16 to September 30 this year, the expert panel will offer guidance on auditing aspects, with a focus on enhancing audit quality. However, the ICAI has underscored that the opinions expressed by the experts are personal and may not necessarily reflect the views of the AASB or the institute. Additionally, it has emphasized that neither the AASB, ICAI, nor the panel experts would assume responsibility for actions taken by auditors based on the advice provided.
This strategic move by the ICAI coincides with a period of heightened regulatory scrutiny and investor activism within the start-up ecosystem. Instances of regulatory actions and investor uproar have underscored the need for auditors to exercise diligence and raise pertinent red flags during statutory audits.
Moreover, the ICAI’s Financial Reporting Review Board (FRRB) has been actively reviewing the financial practices of prominent start-ups like Byju’s, with potential plans to scrutinize others like Paytm Payments Bank. The FRRB, a committee dedicated to enhancing financial reporting practices, plays a pivotal role in ensuring transparency and accountability within the corporate sector.
In addition to addressing start-up-related challenges, the ICAI recently established another expert panel to assist auditors in tackling the complexities of auditing bank branches. Given the unique characteristics of the banking industry, including its expansive geographical reach and diverse customer base, conducting audits within stipulated timelines presents multifaceted challenges for auditors. The panel aims to provide timely guidance on issues such as Non-Performing Asset (NPA) determination and interpretation of complex data encountered during branch audits.
