Government looks to plug gaps in exits of auditors, directors

Government looks to plug gaps in exits of auditors, directors

News

1. In the wake of many auditors (for example- close to 200 auditors this year) who quit the company when the company gets in trouble, the government is looking to tighten the rule these auditors and directors.

Important Facts:

2. National Financial Reporting Authority (NFRA) is asked to review the audit standards and suggest how to make auditors accountable.

3. Under the law, an audit firm, which is a custodian, cannot simply walk out of an assignment that has been given by the shareholders. If there are concerns, they need to be reported properly.

4. Ministry of corporate affairs had sought reasons for large scale auditor resignations in companies. For example- 200 auditors have resigned this year.

5. In case of directors, the government plans to tighten the reporting norms where more disclosures are planned.

6. The ministry of corporate affairs is seeking to strengthen governance standards as part of government’s clean up drive for India Inc.