Stakeholders Need To Work Together To Strengthen Audit Quality: Chairperson, NFRA

Auditors are supposed to follow the stipulations which are available in the standards of the audit and must follow the rule and also consider the principles and spirit behind the law, said Ajay Bhushan Prasad Pandey, Chairperson of National Financial Reporting Authority (NFRA).

Pandey said that auditors are required to report to the government fraud if this comes to their notice and this is not an expectation gap but is understanding gap.

He emphasised the need for a proper audit which must be done in such a manner that it speaks for itself. Further auditors must refrain from escaping from their responsibility of due diligence in the pretext of expert/ legal opinion obtained by him or management.

He also stressed the need for audit committees to ensure independence and support auditors in performing quality audits. The remuneration of auditors should be commensurate with the size and complexity of the audit and enable the firm to build adequate capacity and capabilities, he added.

“Financial reporting is critical because it boils down to good corporate governance and building trust among stakeholders. Trust in financial reporting will encourage investment in the economy. This is where conferences such as this organised by Assocham where these things are deliberated becomes very important.” he said.

“As an Indian, we must be proud of the kind of work we have done as a country. There was doubt about Aadhar, collecting biometrics of 1.2 billion people and creating a unique identity for each one. But we did it as a country. Similarly, we have successfully implemented a GST system that is based on transactional reporting which is another unique feature. Globally returns are filed based on aggregate or total and maybe category-wise transactions. In our system, all sales and purchases are reconciled online for about 1.4 crore GST taxpayers. Even in Income Tax, we have pre-filled forms for about 50 crore PAN holders in the country. These are some achievements that have enhanced ease of living and ease of doing business which are unparalleled anywhere in the world,” he reiterated.