Shaleen ShahThe present crisis of confidence in the audit profession among users and stakeholders, arising from recent market events has to be addressed in a fair manner. The profession, regulators and all concerned have to determine – what is the right medicine?
A professional issue requires a professional response. Thus, the fundamental point is that the solution to the present expectation gap should come out from The Institute of Chartered Accountants of India (ICAI) itself. As a primary step, the Government should empower the ICAI. The institute has done sterling work over the last six decades and yet, over the last decade, on certain basic matters like setting Accounting Standards or Auditing Standards, the government has created separate bodies (such as NACAS) with a superior degree of authority.
Changes in syllabi of the Institute have to go through a long process of governmental approval when most of these are technical matters that the ICAI should solely deal with. It is the ICAI which has the wherewithal to understand what the professional issues involved are, and it is they who should be in charge of the solution.
There are certain other myths about the possible solutions to the perceived ills of the auditing framework. I intend addressing a few of them.
Rotation of Audit Firms
Though, this appears to be a very easy solution, essentially, ensuring “a fresh pair of eyes
