ICAI chief backs RBI on new audit rules

NEW DELHI: In the tussle between foreign and Indian firms over auditing bank accounts, the Institute of Chartered Accountants of India (ICAI) president Nihar Jambusaria has backed the RBI’s new norms and said there is no dearth of entities to perform the task credibly.
In a conversation with TOI, the head of the chartered accountants’ body said that the move to allow rotation will remove the possibility of conflict of interest. “Our ethical standards talk about acquaintance threat and the new norms seek to address that. If you work for the same client for a long time, due to acquaintance your independence can be an impacted,” said the head of ICAI, which is the regulatory agency for auditors.
In a fresh circular last month, the RBI has provided for a three-year term for statutory auditors and statutory central auditors with the audit firm being ineligible for reappointment for a second term. The rule is applicable to the entire network, causing tremendous heartburn to large entities, especially the Big Four.
While Jambusaria maintained that there were several Indian firms capable of taking on this task, he said the institute does not distinguish between Indian and overseas firms.
“The cooling period should be there, there are so many capable firms in India and the RBI should make full use of the resources,” he said, adding that ICAI itself undertook a detailed training programme to keep members up to date on technological aspects.
He, however, said that ICAI had suggested to the RBI that the rules should not kick in immediately and should be enforced after a year or so. The head of the chartered accountants’ professional body also said that there is some non-audit work which did not clash with audit jobs.
“If you are filing GST returns, there is no clash with audit but yes, there is a conflict of interest when you are providing consulting services,” he said. The RBI has prescribed a one-year gap between audit and non-audit assignment for a firm taking up a bank or NBFC assignment.

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