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Chandra panel report in 45 days

BS Markets Bureau in Mumbai

The Naresh Chandra Committee on auditor-corporate relations, which met here today, took into account a number of issues including rotation of auditors, qualifications in the financial statements, regulations of the professions and independence of directors.

The panel will be meeting cross-section of people around the country and submit its report within 45 days.

Most of the members of the view that the legislations and guidelines, which are already in place, should be implemented on a priority basis.

"India already has in place various legislations and guidelines. They should be enforced at the earliest," P Krishnamurthy, vice-chairman, JM Morgan Stanley, said after the meeting.

Recently, the Institute of Chartered Accountants of India recommended that rotation of auditors should be compulsory so that there is no chance of nexus developing between the company and its auditors.

The Investors' Grievances Forum led by parliamentarian Kirit Somaiya raised a point at the committee that the system of rotation would have to be done in such a way so that the auditors do not form a cartel and move within it.

In recent financial statements, auditors have taken to qualifying statements to the effect that the data provided to them is the responsibility of the management and the auditors are merely certifying the data provided to them. This serves as an insurance against lapses being discovered in the future.

The IGF has suggested that qualifications in audit reports should have detailed explanation attached to them which should be submitted to the regulator. The management should also have to submit their explanations and answers to the qualifications to the regulator.

Points were also raised regarding the need for the regulation of auditors - and whether there was the need to have a separate body which would be governing CAs, company secretaries and cost accountants.

Independent directors and their role on the boards of companies was also discussed - and there was some suggestions that an indemnity insurance should be provided to them in case of any risks of default accruing to them in the course of discharge of their duties.

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