New Delhi: Stressing the importance of financial integrity, audit regulator NFRA chief Ajay Bhushan Prasad Pandey on Friday said auditors should ask questions of the company's management to ensure that the financial statements are true and fair.
He also said that audit committees of companies should read the disciplinary orders passed by the National Financial Reporting Authority (NFRA) as many lessons can be learned from them.
The watchdog is taking steps to improve overall audit quality as well as take action against erring auditors.
Speaking at a conference organized by industry body Assocham in the national capital, Pandey said financial integrity has become more important than ever for the country's corporates and audit committees are at the heart of a high-quality financial reporting framework, which is a key Is element. Sound corporate governance.
He said that audit committees must read the disciplinary orders of NFRA and there are many lessons to be learned from it.“What has been done to ensure that the financial statements are true and fair? What questions did you ask when you approved related party transactions? Those things become very important.
"What are the internal financial controls in place... (all those things) you don't have to ask questions about. In some cases, you won't get answers but at least you have questions and it's documented," Pandey said. "
Furthermore, the NFRA chief said that he has observed a pattern of malpractices and fraudulent activities.
He also suggested keeping a database that would show a list of failures reported over the period of auditing.According to Pandey, auditors should ask for more time from the company's management to give a presentation and this can help in preventing irregularities in the company.
Ashok Haldia, Chairman of the ASSOCHAM Task Force for Accounting Standards Sustainability Accounting and Integrated Financial Reporting, said the quality review and oversight conducted by regulators should also reflect the accountability and work done by the auditors as well as the audit committee.
He also said that audit committees of companies should read the disciplinary orders passed by the National Financial Reporting Authority (NFRA) as many lessons can be learned from them.
The watchdog is taking steps to improve overall audit quality as well as take action against erring auditors.
Speaking at a conference organized by industry body Assocham in the national capital, Pandey said financial integrity has become more important than ever for the country's corporates and audit committees are at the heart of a high-quality financial reporting framework, which is a key Is element. Sound corporate governance.
He said that audit committees must read the disciplinary orders of NFRA and there are many lessons to be learned from it.“What has been done to ensure that the financial statements are true and fair? What questions did you ask when you approved related party transactions? Those things become very important.
"What are the internal financial controls in place... (all those things) you don't have to ask questions about. In some cases, you won't get answers but at least you have questions and it's documented," Pandey said. "
Furthermore, the NFRA chief said that he has observed a pattern of malpractices and fraudulent activities.
He also suggested keeping a database that would show a list of failures reported over the period of auditing.According to Pandey, auditors should ask for more time from the company's management to give a presentation and this can help in preventing irregularities in the company.
Ashok Haldia, Chairman of the ASSOCHAM Task Force for Accounting Standards Sustainability Accounting and Integrated Financial Reporting, said the quality review and oversight conducted by regulators should also reflect the accountability and work done by the auditors as well as the audit committee.
