On Thursday government announced the setting up of the National Financial Reporting Authority (NFRA), which will police the auditors. The body will recommend to the government accounting standards and policies that audit companies should follow and monitor.
The Nirav Modi scam numbed the nation by its sheer brazenness. That a handful of individual could dupe the banking system of Rs 13000 crore over 7 years, sidestepping several layers of audits, shocked the nation. Not surprising, the government has acted swiftly to audit the auditors.
On Thursday it announced the setting up of the National Financial Reporting Authority (NFRA), which will police the auditors.
This body will recommend to the government accounting standards and policies that audit companies should follow and monitor.
World over, auditors were policing themselves like in India. But the self-regulation ended in the US after Enron and in many countries after the Lehman crisis. In India the Institute of Chartered Accountants (ICAI) continued to insist on self-regulation until last week, when the NFRA was announced by the government.
But is this too little too late, given that a parliamentary panel had proposed setting up such a regulator all the way back in 2009 in the aftermath of the Satyam scandal? In fact a section of the Companies Act empowered the government to set up this regulator in 2013. Then why did the government wait till 2018 to make this move?
Another question is what will be the role of the Institute of Chartered Accountants of India, or the ICAI once the NFRA comes into existence?
To discuss this and more, CNBC-TV18's Latha Venkatesh caught up with Amarjit Chopra, Former President, ICAI, Mohandas Pai, Chairman of Manipal Global and PR Ramesh, Chairman Deloitte India.
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