Financial Daily from THE HINDU group of publications
Thursday, Sep 05, 2002
Financial Daily from THE HINDU group of publications Thursday, Sep 05, 2002 |
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Corporate
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Regulatory Bodies & Rulings DCA guidelines for audit panel expected shortly Our Bureau
NEW DELHI, Sept. 4 THE Department of Company Affairs (DCA) will shortly come out with rules and guidelines for the audit committee. Mr R. Vasudevan, Director, DCA, said this while inaugurating a seminar on `Dynamics of audit and directors' responsibility' organised by the PHD Chamber of Commerce and Industry (PHDCCI), here today. The binding nature of the audit committee was still an issue and the department was now considering the issue of consolidation of accounts, Mr Vasudevan said. Regarding disclosure requirements by Indian companies, he said it was an area which required attention. Mr Y.H. Malegam, Managing Director, S.B. Billimoria & Co, said there must be a critical review of audit systems . "One should be able to question and challenge anything that one doesn't understand. Confidence is betrayed when the profession does not perform at the levels that are required," he said adding that "I do not believe in a systematic failure." Recent events had shown there had been a performance failure in the audit systems and this was due to the changes in culture over a period of time, he said. He said the failure of Enron was not due to failure of accounting standards, but was more due to non-compliance with available laws. Hence, there was a need to create a conceptual approach to the concept of audit independence. "In India, we need to be cautious as to how to react to a particular situation and perhaps follow the conditions of UK which are more similar to India and not follow the US blindly which has responded to special circumstances," he said. If one identified the threats of audit independence, it could be classified under five heads. One was the threat of self interest, the second was the threat of self-review, and the third was the threat where auditors took an advocacy role, fourth is the threat of familiarity or trust and finally there was the threat of intimidation, he explained.
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