Limning Auditing Indian Auditors

Abstract

The boom of regulatory agencies is a common global phenomenon, and its basics are deeply rooted in national settings, leading to the setting up of specific regulators. Theoretically, auditors must demonstrate their professional prowess, skepticism, and analytical procedure, and effectively communicate audit outcomes to the stakeholders. Interestingly, the Indian audit profession is at its crossroads: constrained by scams and multiple regulators. Reform initiatives in the wake of corporate shenanigans compelled the creation of the National Financial Reporting Authority (NFRA) under Section 132 of the Companies Act, 2013. However, the accounting profession regulator, the Institute of Chartered Accountants of India (ICAI), alleges penetration of the former in its regulatory jurisdiction. Against this backdrop, adopting a descriptive approach, the current study attempts to unearth the factors leading to such face-offs for offering an amicable solution. The study concludes that the ICAI’s objections to treating the NFRA as a “super-regulator” cannot be supported. Consequently, the observation of the Committee on Experts constituted by the Supreme Court. Vesting investigating power in the NFRA could be a game changer in regulating auditors, audit firms, and audit networks. In light of the findings, the auditors could motivate to improve the audit quality substantially.