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July 2023

Future of Audit: The Transformation Agenda

By P R Ramesh, Chartered Accountant
Reading Time 28 mins
 
BACKGROUND
The audit profession is as old as civilisation itself, but its relevance is being questioned today, perhaps more strongly than ever before. This article is an attempt to identify the root causes for the erosion of confidence in the audit function and actions required to transform this profession particularly in the context of India’s growth and the aspiration of the Indian Auditing Profession to be the world leader.
 
Having been part of the audit profession for over four decades my views may be somewhat biased in favor of the profession though I have tried to be impartial in my assessment of the state of the profession and the actions required to transform the audit function.
 
Auditing limited companies, made mandatory around a hundred years before, was always a check on the so-called ‘principal/agent problem’ inherent in the corporate form of business. As Adam Smith once pointed out, “managers of other people’s money could not be trusted to be a
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