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New Audit Norms Aim to Ensure No repeat of past Frauds ICAI Shows Support

The long shadow of a IL & FS, DHFL and YES Bank has reportedly prompted the central bank to stay firm on its stand that financial businesses must comply with the latest auditing norms which simultaneously seek to lift standards decentralized the industry and prevent conflicts of interest involving the various revenue streams and consulting companies large audit firms either linked to or affiliated to the big four currently dominate the audit of financial services company the new guidelines are expected to give opportunity to small and midsize Indian audit firms potentially increasing competition breaking old links and bringing in more scrutiny analysts have described the largest Central Bank move announced on 27th of April as measures aimed at confidence building.

For any industry or even country to be taken seriously the disclosures and Audit must be unquestionable,  as an analyst when I am analyzing numbers I would welcome any more of that improves transparency and disclosure quality also confidence building steps would be seen as positive by global investors as well this move by the regulator will help bringing more confidence in auditing. There could be some operational issues initially but it will build investor confidence in the long-term said Lalitab SHRIVASTAVA and ANALYST  at Sharekhan.

He expects some teething troubles through the period of transition but the end outcome should be better this move by the regulator will help plug the loopholes and bring more confidence to audit  SRIVASTAVA said.

The new norms stipulate joint audit a cap on the number of assignment for each firm treatment of forms under the same network as one entity and restriction on combining audit and non-audit work with an aim to reduce potential conflicts of interest.

The new audit norms segregate audit and non-audit work in line with the rules in the developed economies.    to be sure some of the large audit firms have reportedly already discontinued providing non-audit services to their audit clients in India this will improve audit quality avoid conflicts of interest and ensure the independence of auditors which will also support financial stability set a person familiar with the regulators intentions these measures will further facilitate the expansion of an experienced audit pool that is needed to cater to the needs of a growing economy. S-ET

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