ICAC Proposes Major Audit Changes
Jul. 24 – India’s audit regulator, the ICAC, has recommended new changes to audit procedures in India in the wake of the recent Satyam scandal.
These include the appointment of joint auditors for large businesses, and the rotation of auditing partners assigned to specific clients every five years.
The changes are recommended due to the current state of India’s accounting and audit professions which have until recently restricted the size of audit practices and led to a gap between the size of corporations subjected to audit and the resources of the firms authorized to audit them.
The Satyam scandal led to the arrest of PriceWaterhouseCoopers auditors and also a review of the restrictions placed on the development of the industry.
In short, a multi-million dollar fraud occurred without the auditor having sufficient resources or personnel in place to deal with the complex nature of the case. India’s audit industry is currently in the initial phases of reform and is only opening up to foreign practitioners, however,these new recommendations are intended to help fill the regulatory gap until such firms can develop enough resources to cope.
In India, public sector companies and banks have joint audits. The concept of a joint audit – where more than one firm audits the financials – is not popular globally and of the G20 countries is only practiced by France .