Govt To Set Eligibility Standards For Auditors Of Large Firms

The Government of India is examining all large companies and public interest entities, audit firms' size, repute and technological prowess. An action to reserve the auditing from the unauthorised firm, according to a media report on Wednesday.

It added that the discussion is at an early stage and revolves around providing a value-added approach, thus evaluating the inadequate audit standards that put investor interests at risk.

The government’s inspection is likely to come following several instances wherein the companies with large public floats caused inconvenience by auditing their accounts by tiny, unknown audit firms developing weak quality audit reports that made the investors suffer. To name such a prominent blunder is the Hindenberg Research report that highlighted the independent auditor for Adani Enterprises and Adani Total Gas, as “hardly capable of complex audit work”.

According to reports the government will direct the auditors of 1,000 large listed companies in India to file transparency reports with the National Financial Reporting Authority (NFRA) in a specified format from the current financial year. 

Meanwhile, this will improve the audit’s credibility and boost confidence among the investors thus making the small audit firms suffer if working unethically.