Audit firms may not be banned due to mistakes of a few auditors within the company, reports The Financial Express.
The Company Law Committee has recommended banning only those auditors who have been found guilty and letting off the firm with a hefty fine, the report stated.
The move, if implemented, may provide some relief to auditing firms like Price Waterhouse (PW), Deloitte Haskins & Sells and BSR & Associates (part of KPMG).Moneycontrol could not independently verify the report.
The committee, led by Corporate Affairs Secretary Injeti Srinivas, has suggested strict action if the firms have obstructed justice, the report stated.
The panel will have to discuss the proposal with various financial sector regulators, especially the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), the article quotes a source as saying.
Such a move will require amendments to the Companies Act and the Chartered Accountants Act, the report said.Deloitte Haskins and BSR & Associates have come under the scrutiny over alleged lapses in the audit of Infrastructure Leasing & Financial Services (IL&FS). The Bombay High Court recently granted the two firms interim relief against 'coercive action' after the Ministry of Corporate Affairs (MCA) sought a ban of these audit firms.
SEBI had banned PW in January last year over its alleged role in the Satyam scam. The Securities Appellate Tribunal (SAT) overturned SEBI’s order in October, which the market regulator has challenged.
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