The Companies Act 1956, (the Act) provides the framework for appointment of independent statutory auditors to audit the accounts of the companies and for reporting to shareholders. Such audited accounts are also required by law to be displayed on the electronic registry of companies for general viewing. The Act also provides for punishment/penalty for non-compliance/default of the above requirements. The Indian Auditing and Assurance Standards are formulated under the law on the lines of the International Auditing and Assurance Standards and, as such, contain the best global practices for compliance by auditors. The conduct of auditors in complying with the technical and legal framework governing audit of companies is also regulated under the Chartered Accountants Act, 1949. Where any misconduct on the part of statutory auditors comes to notice, the Institute of Chartered Accountants of India, on a complaint or otherwise, ascertains the actual role and discharge of functions by the statutory auditors with regard to the accounting and auditing standards, the provisions of the Act etc. for action under the provisions of the Chartered Accountants Act, 1949, in addition to legal liability under the Companies Act, 1956. As there is already a comprehensive regulatory framework in existence, there is no proposal to specifically provide for stricter norms for auditing in large companies.
This information was given by Shri Prem Chand Gupta, Minister of Corporate Affairs, in a written reply in the Rajya Sabha today.