The government is working to improve the regulations for auditors and corporate professionals as it looks to strengthen the "fabric of corporate governance" in the country, according to Union Minister P P Chaudhary.
The government is working to improve the regulations for auditors and corporate professionals as it looks to strengthen the “fabric of corporate governance” in the country, according to Union Minister P P Chaudhary. His comments come against the backdrop of some auditing entities coming under the scanner of the Corporate Affairs Ministry following various complaints. Besides, the ministry is also examining recent instances of auditors resigning from companies on various grounds.
In a recent interview to PTI, he said the ministry is working closely with professional regulatory bodies under it to “improve the regulations for the auditors and corporate professionals”. According to him, the ministry is looking to improve the fabric of corporate governance in the country. The notification for setting up the National Financial Reporting Authority (NFRA) has already been issued and it would act as an independent regulator for the auditing profession.
“The NFRA can investigate chartered accountants and their firms, and its powers extend to listed companies and large unlisted public companies… recruitment of chairperson/ members for the NFRA has already begun,” the Minister of State for Corporate Affairs said. Earlier this month, a senior official had said the ministry was inquiring into around 10-15 complaints related to auditors.
To a query about instances of auditors resigning from companies citing lack of access to financial information and other issues, Chaudhary said the ministry is examining such recent cases of resignation. “However, this is a regular practice and too much should not be read into such cases,” he noted. In recent months, scores of auditors have left audit work of companies, mostly listed ones, citing various reasons.
The Companies Act, 2013, contains elaborate provisions regarding the liability of statutory auditors in case an auditor has contravened the provisions knowingly or willfully with the intention to deceive the company or its shareholders or creditors or tax authorities. Listing out the immediate priorities, Chaudhary said the ministry would be completing the action against struck off companies and ensure effective working of the Insolvency and Bankruptcy Code (IBC).
The ministry has served notices to around 2.25 lakh companies that have not been carrying out business activities for long and depending on their responses, a final decision on deregistering them would be taken. The latest exercise comes after the ministry struck off the names of about 2.26 lakh companies from official records for being inactive and not making statutory filings for a long time.