Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: due date for vat payment :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: cpt :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: empanelment :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: form 3cd :: TDS :: ACCOUNTING STANDARD
 
 
« General »
 Corporate tax rate may be lowered to 25% for bigger Indian companies
 Simplified one page Income Tax Return Form: Changes to keep in mind before filing tax return for AY2017-18
  No proposal to replace Income Tax with Banking Cash Transaction Tax
 GST coming July 1 despite calls for delay: Revenue Secretary Hasmukh Adhia
 Centre introduces provision of taxation on NPS in Income Tax Act
 Income Tax Department Clarifies On Cash Withdrawal From Banks, Post Offices
 The Goods And Services Tax (Compensation To States) Bill, 2017
  Goods and Service Tax (GST) and Real Estate Sector
 New Income Tax Rules On Home Loan Come Into Effect
 Here's how late filers can save on stress and taxes
 Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib ?Kalyan Yojana, 2016

Processing qualified audit reports may be tough for Sebi: analysts
July, 11th 2012

The capital markets regulators attempt to spruce up the quality of financial reporting by listed companies may fall short of its intended goal, especially in relation to so-called qualified audit reports, some analysts say.

The Securities and Exchange Board of India (Sebi) on 26 June notified a mechanism to process such annual audit reports filed by companies.

A qualification in an auditors report on a companys annual financial accounts typically indicates a disagreement between the auditor and the firms management and may indicate that the auditor considers the accounts to be misleading.

The auditor indicates his disagreement by including a statement in the report. Reports with such qualifications are called qualified audit reports.

Wherever possible, the auditor is also supposed to quantify the impact of such a qualification on the companys books, and the companys directors are supposed to explain it to shareholders.

Sebis new mechanism involves the creation of a Qualified Audit Report Review Committee (QARC), which will consist of representatives from the Institute of Chartered Accountants of India (Icai) and the various stock exchanges, and will help Sebi in dealing with qualified audit reports.

Sebis mechanism includes the imposition of new penalties as well a restatement of accounts in case the qualification is significant.

Once a stock exchange reviews the audit report, it will refer it to Sebi, which will, in turn, refer it to the QARC. If the qualifications are significant and the managements explanations arent satisfactory, QARC will refer the matter to the Financial Reporting Review Board (FRRB), which comes under the Icai.

If these bodies contend that the qualification is significant, they would finally refer the matter back to Sebi for penal action.

It is a step in the right direction. However, (the) Companies Act also needs to be aligned with respect to this requirement, said Dolphy DSouza, a partner at Ernst and Young Global.

The Companies Act 1956, which regulates companies in India, does not allow for restatement of accounts once the annual general meeting (AGM) of a company has cleared them, DSouza said.

Globally, restatements are more common and are done to correct errors identified in the financial statements or to reflect changes in accounting policies, notes an advisory by KPMG India on the issue. However, it is unclear whether QARC or FRRB will provide management with an additional opportunity to clarify its position on the qualification or whether the explanation provided by the company in the directors report will be deemed to be the companys response.

Amarjit Chopra, a former president of Icai, said the biggest stumbling block in Sebis mechanism is that FRRB does not have the power to call for financial information from companies. Instead, Sebi must call for financial information and intimate FRRB, Chopra said.

Chopra also pointed to the laxity of implementation of regulation in India. Typically, in India, I am in trouble only if someone catches me, else I go scot free, Chopra says.

Jamil Khatri, head of accounting advisory services at KPMG in India, echoed Chopras view. The challenge before Sebi is that they do not have the proper infrastructure to implement this. In the US, the Securities and Exchange Commission has all the infrastructure internally to deal with such issues.

The registrars of companies, who should have addressed this matter many decades ago, have almost never bothered. That is the main reason for India having more qualified audit opinions than any other country in the world, said Nawshir Mirza, a fellow of the Icai. In most countries a qualified audit opinion on financial statements would be treated with great concern by the management and board of the corporation concerned.

The registrars of companies come under the ministry of corporate affairs.

Another analyst, who did not want to be identified, said that there is often a casual approach to accounting and people are often quiet about it (accounting fraud).

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multimedia Presentations Multimedia Solutions 3D Solutions Corporate Presentations Business Presentations Multimedia Presentation India M

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions