ICAI mulls audit partner rotation for listed firms
May, 18th 2007
Move aimed at quality control for audit firms
Audit quality The RBI is also in favour of audit partner rotation in non-banking finance companies. The council might look at a seven-year period for audit partner rotation.
Audit partner rotation may become mandatory for listed public companies in the country, with the Institute of Chartered Accountants of India (ICAI), the auditing profession regulator, toying with such a proposal to improve quality control over audit firms.
"The council will only look at audit partner rotation. There is no plan to look at audit firm rotation. That has been shelved," said Mr Sunil Talati, President of the ICAI.
A few years ago, the ICAI Central Council had given in-principle approval to audit firm rotation subject to a referendum among members coming out in favour of such a rotation.
The referendum did not actually take place.
This time round, it is quality control and the ICAI's commitment to converge with international standards on quality control for audit firms that are primarily driving the move to look at audit partner rotation.
Besides, the Reserve Bank of India is also in favour of audit partner rotation in non-banking finance companies (NBFCs).
"We are going to review our quality control standard on audit firms in the light of the Clarity project being undertaken by IAASB," said Mr Harinderjit Singh, Chairman of the Auditing and Assurance Standard Board (AASB).
"Audit partner rotation is something that the council will consider under the quality control aspect."
He indicated that the council might look at a seven-year period for audit partner rotation.
International auditing standards provide for seven-year period rotation for audit partners.
Meanwhile, the AASB on Thursday reiterated its commitment to convergence with the international engagement and quality control standards.
This commitment was made to Mr John Kellas, Chairman of the International Auditing and Assurance Standards Board (IAASB), and Mr Jim Sylph, Executive Director of IAASB, who are on a visit to India to discuss convergence-related issues.