Errant audit firms may be penalised, says Khurshid

The Institute of Chartered Accountants of India (ICAI) has submitted the first part of its report, after consideration by its council, in which it has recommended to the government amendments in the Chartered Accountants Act, 1949, and rules and regulations framed under it so that action can be taken against firms of chartered accountants, in addition to individual chartered accountants, for misconduct.

Giving this information in written reply to a question in the Lok Sabha, minister for corporate affairs Salman Khurshid said that some of the other major recommendations in the ICAI report are strengthening mechanisms to monitor compliance with ICAI regulatory requirements, seeking empowerment to scrutinise financial statements of public interest entities, and introduction of a system by the Reserve Bank of India whereby direct external confirmations on specified items like bank balances, advances or deposits can be given to the statutory auditors by the banks concerned.

Khurshid informed the house that the first part of the report submitted by ICAI is under consideration of the government.