India Proposes Independent Regulatory Audit Body
Mar. 4 – The Indian government is mulling over proposals to set up an independent regulatory body along the lines of the US Public Company Accounting Oversight Board (PCAOB) to better regulate and monitor the domestic audit industry. This comes on the back of the recent Satyam scandal where auditors failed to prevent India’s largest ever corporate fraud.
Currently, the overseeing of auditors is undertaken by the Institute of Chartered Accountants. They are said to be resisting the establishment of a new regulator, however the government is concerned that they too are failing in their duties. The proposal is set to be put forward to the Ministry of Corporate Affairs.
The following of the US model marks a step forward in compliance issues. The American PCAOB was established to replace the Public Oversight Board, an industry run, self regulating body that failed to monitor and spot US accounting scandals such as Enron and Worldcom. The PCAOB takes its regulatory powers from the Sarbannes Oxley act, which oversees the auditors of public listed companies, and also consulting and tax services, and the Indian government now appears keen to duplicate this model.