Dear Members,
In my
message for the previous month, I had reached out to you, inviting suggestions
for initiatives which you would like BCAS to carry out. I am overwhelmed
by the response. I’m sure your feedback will go a long way in improving our
Society; we will try to implement the maximum possible suggestions.
ICAI Leadership: ICAI elected its new President and Vice-President for the term 2020-2021.
CA. Atul Kumar Gupta has been elected President and CA. Nihar
Jambusaria Vice-President with effect from 12th February, 2020.
Both leaders are widely respected for their strong organisational skills, deep
insight into the affairs of the profession and for their enormous contribution
to the cause of our profession during their terms with the Central Council. We
congratulate them on their new roles and wish them all the best for achieving
enormous success in taking the profession to new peaks and measure up to the
expectations of all members. I look forward to working closely with the ICAI,
especially its new leaders, and strengthen the co-operation between the ICAI
and the BCAS. I am also proud to inform you that Nihar Jambusaria
is a life member of our Society since 1995.
BCAS
@ your Doorstep: This is another initiative of our Society wherein
we provide tailor-made training to our corporate members and other corporates
at their doorstep, deploying our faculty and expertise based on the corporate’s
training needs. I am happy to inform you that last month we conducted training
for the credit officers of a large public sector bank on understanding
financial statements of borrowers prepared under Ind AS, various disclosures
and understanding the various comments like audit modifications, emphasis of
matter, Key Audit Matters and other matters in an Auditor’s Report. The session
was very interactive and two live case studies of large corporate borrowers
(under financial stress) were discussed threadbare. These credit officers could
gain experience in better understanding the financial statements, thus
substantially improving their credit appraisal, supervision and monitoring
skills. Our efforts were well appreciated and we look forward to undertaking more
such training for corporates under our umbrella of ‘BCAS @ your Doorstep’.
MCA’s
Consultation Paper: In February, the Ministry of Corporate
Affairs issued a notice inviting suggestions and comments along with
justifications on a consultation paper to examine the existing provisions of
law and make suitable amendments therein to enhance audit independence and
accountability. This paper has raised several questions on burning and
sensitive issues such as economic concentration of audits, non-audit services to
audit clients, joint audits in case of larger companies and public interest
entities, proposed panel of auditors (like CAG / RBI / NFRA), imposition of
concurrent audits, restriction on the number of audit firms a group can have in
the whole of India, disclosure requirement on probability of default on the
lines of credit rating agencies, submitting quarterly returns to SEBI of
unlisted companies whose parent is listed, development of a ‘Composite Audit
Quality Index’ for auditors and audit firms to improve accountability,
resignation of auditors and other similar matters. The sole objective of this
was to solicit the views and comments of other Government Departments,
Regulatory Agencies and the general public on suggestions relating to
amendments in existing law to enhance audit independence, audit quality and
accountability. The Accounting and Auditing Committee of our Society met at
short notice, deliberated in detail on all the issues raised by this paper and
sent our response and representation to MCA well in time, keeping in mind the
interests of our members. The response of the Society has been mailed to all
the members and is also available for viewing on our website and all other
social media platforms.
CARO
2020:
This is issued with the objective of strengthening the corporate governance
framework under the Companies Act, 2013; under the powers conferred under
sub-section (11) of section 143 of the Companies Act, 2013. the Central
Government has notified the Companies (Auditor’s Report) Order, 2020 (CARO,
2020). The eligibility criteria in CARO, 2020 have not been changed and hence
it shall be applicable to all those companies on which CARO, 2016 has been
applicable. CARO 2020 has 21 clauses and 47 sub-clauses, thus enhanced
reporting requirements by the auditors including reporting on proceedings
initiated / pending if any against the company under the Benami Transactions
(Prohibition) Act, 1988; stricter reporting on discrepancies noticed on
physical verification of inventory; reporting on mismatches in physical stock
and those reported to lending banks / financial institutions; disclosure of
unrecorded transactions in income tax assessments; utilisation of funds; GST
dues payments and cash losses; declaration of company as wilful defaulter by any
lender; disclosure of whistle-blower complaints; any resignation of the
statutory auditors during the year, and so on. Reporting under CARO, 2020 would
necessitate enhanced due diligence, reporting responsibility and disclosures on
the part of auditors and has been designed to bring in greater transparency in
the financial state of affairs of companies. Members are requested to be well
informed and equipped to report under CARO, 2020 as it is applicable for audit
of financial statements of eligible companies for the financial years
commencing on or after 1st April, 2019.
Before
I sign off, let me offer my warm wishes to you and your family on the joyous
occasion of Holi! I wish with all my heart that it brings more colours to your
life.
With
Best Regards,
CA
Manish Sampat
President
