Amid the auditors' role coming under scrutiny, ICAI's newly elected President Aniket Talati on Thursday said auditors are not expected to look at every single invoice and transaction but are required to obtain reasonable assurance that the financial statement of a firm is free of material misstatement.
The role of the auditors came under scrutiny, especially in the post-IL&FS crisis.
"Our auditing standard is today largely in line with international accounting standards. You cannot expect that when a listed company is giving quarterly financial results in 45 days and 60 days for the year-end, it can never be intended that you are going to look at each and every single transaction. It has never been the expectation of an audit," Talati said.
According to him, the expectation from a statutory auditor to look at 100 per cent invoices and 100 per cent transactions has never been there and an auditor is expected to exercise the highest level of integrity. The auditing entity needs to have technical competence in reporting standards and reporting obligations.
When asked about Sebi's recent order on Brightcom Group Ltd, Talati, who was elected as President in February, said that he has not read the order although ICAI recommends strict action against those involved in the accounting fraud.
Capital markets regulator Sebi recently passed an interim order against the company for accounting fraud involving the manipulation of financial statements.
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On the entire Adani-Hindenburg report row matter, the ICAI President said the matter is now 'sub-judice' and a Supreme Court-appointed committee is investigating the recent Adani Group shares crash, triggered by the Hindenburg Research's fraud allegations and other regulatory aspects related to stock markets.
On a query about the correlation between size and quality in the context of an audit firm, he said audit quality is of paramount importance for the institute. The perception that only large firms are better and more competent is not correct for any profession.
There were media reports that suggested that the Hindenburg report made the "tiny firm and capability" arguments against Shah Dhandharia, Adani Group audit firm.
Optimistic about the future of the auditing profession, Tatati said the contribution of accounting in the country's services export has grown to 30 per cent in the financial year ended March 2023 from 29 per cent in the preceding year.
On reporting challenges faced by users in filing on Corporate Affairs Ministry's MCA21 portal, Talati said ICAI is trying to educate the business community at large about certain forms and functionality.
With regard to market access to audit and accounting professionals from the UK and Canada to India, Talati said on a reciprocity basis, the institute is open to offering market access to audit professionals from these two countries to Indian shores.
"ICAI cannot resolve technical issues, which is a technology upgrade that the Ministry is doing. We at ICAI are trying to educate business users and the business community at large about the new portal and certain functionality. Where there are understanding issues, We are doing a webinar and we are trying to reach out with our helpline numbers," he said.
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