Auditors, Banks and Accountability

DrT.V.Gopalakrishnan (Fort worth, Texas)
30 Aug, 2011 04:09 AM

The editorial reads well and the suggestion that auditors should be paid from a pool of finance is welcome to prevent frauds and provide better accountability. However, this will not prove to be a foolproof method as long as the Boards of Directors are not made accountable and corporate Governance is rated in a transparent manner. The banks have also a major role to ensure that the corporates they finance conduct the accounts satisfactorily and the NPAs do reflect correct position. The auditors of Companies and auditors of banks have to have some inter action to ensure that all the Companies' dealings with banks and conduct of accounts, balances with banks, current assets, working capital position and NPAs reflect a true and correct position in terms of banks books and companie's books. Such an approach would itself reduce the nature of irregularities as seen in Satyam's books.
The ethics and values adhered to by Auditors in both banks' and corporates' accounts need to be independently assessed by their respective regulators viz; the Reserve Bank and the SEBI. There should be adequate checks and balances to ensure that the accounts reflect the correct position and there is no room for concern for investors. The Auditors unfortunately have not been enjoying the confidence of Regulators, investors and the Government is a fact to be taken note of by the Institute of Chartered Accountants of India while fixing their compensation and mode of payment.

This appeared in ET E paper dated 30/08/11.