Stress on auditors’ accountability is good, but more reforms are needed – The Hindu BusinessLine

Along with rating agencies, statutory auditors have played a central role in the recent string of corporate scandals that have rocked India Inc and undermined public confidence in the financial system. IL&FS and DHFL saw yawning mismatches between assets and liabilities come to light after debt defaults. The PMC Bank failure seems to be the result of concentrated crony lending that blatantly flouted regulatory norms. In many instances, post-mortem forensic audits commissioned by regulators have uncovered evidence of financial fraud and window-dressing on a grand scale, that the statutory auditors apparently failed to detect despite their close acquaintance with the firm’s finances for years. Therefore, the Ministry of Corporate Affairs is quite right to consider measures that will place a greater burden of accountability on the statutory auditors of companies.