By P. N. Shah, H. N. Motiwalla,Chartered Accountants
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Generation of black money and its stashing abroad in the tax havens and offshore financial centres has dominated discussion and debate in the Parliament and in public forum in recent years. In the White Paper on Black Money recently laid before the Parliament this problem and its complexities have been discussed in detail. In this report para 5.2.75 deals with ‘Enhancing the Accountability of Auditors’ which reads as under.
“5.2.75 Unlike many developed countries, Auditors in India have not been requisitely accountable, resulting in frequent undermining of this important aspect. Apart from recent cases of distortionary corporate governance involving highly reputed firms, cases are detected regularly by the regulatory authorities where the Auditors have failed to point out gross violations and even blatant misrepresentations. In the absence of adequate effective provisions, the Auditors are hardly ever held accountable for these lapses. Another aspect of this problem is the way in which a firm opts for an Auditor in this environment of low accountability and prevalent evasion, since a strict Auditor ready to blow the whistle can hardly expect to thrive amidst competitors, many of whom may be more than willing to co-operate and compromise at different levels. As a result, a very important regulatory tool is virtually losing its role in contributing towards greater compliance. There will be need in future to look into various aspects of the functioning and regulation of the role of Auditors and various other professionals verifying the declarations and statements made by firms and ensure that there are adequate safeguards and sufficient accountability of such professionals.”
Such sweeping remarks about our profession in an official document laid before the Parliament indicate the present thinking in the minds of these who govern and regulate our profession. Members of ICAI should adequately respond to such remarks.
