If India aims to become a global power by 2047, it needs to fully adopt global accounting and auditing standards, says National Financial Reporting Authority (NFRA) Commissioner Ajay Bhushan Pandey. Chief made the claim Thursday.
Addressing the national conference on ‘Changing Accounting and Reporting Landscape’ organized by Assocham in the capital, Pandey stressed that India should keep pace with global standards but not seek carve-outs as per its unique circumstances. .
He pointed out that India has an advantage in the changing financial reporting environment as many accounting and auditing reforms have taken place around the world decades ago. “Many of the reforms we are talking about now have already taken place around the world 15 years ago. Can India afford to say that our country is unique and we are not going to integrate with the whole world? ” asked Pandey.
His remarks come amid a dispute between NFRA, the country’s only independent auditor, and CA Institute over changes to key auditing standards (SA600 – Use of the work of another auditor) governing the conduct of group audits. It is important because it was issued while the dispute was still ongoing. country.
The issue between ICAI and NFRA concerns the alignment of SA600 and ISA 600 (International Standard on Auditing). While NFRA advocates full integration, ICAI believes that in the Indian context there is a need to carve out requirements in auditing standards for group audits of companies.
ICAI is against allowing the lead auditor (group auditor) to access or view the reports of the component auditors. However, this practice is permitted by international standards.
Pandey, without naming ICAI, pointed out that there will always be certain groups who claim that the situation in India is different and therefore seek local solutions. “In fact, that is something we should be careful about,” he said, adding that there is no benefit in taking the position that “there is no objection to adopting a global standard, but it should be tailored to India’s needs”. Ta.
“We need to understand that deviations in adoption may be a few percentage points, but if 90 percent deviate from the world standard, we need to understand that such a form of adaptation cannot occur. “There is,” Pandey said.
He also said those opposed to full integration with ISA 600 need to understand that NFRA is not bringing in anything the world hasn’t done or isn’t working on.
“In this particular case (SA 600), we are privileged to have 10 to 15 years of global experience in this regard,” he said.
He emphasized that if the lead auditor could properly supervise subsidiary auditors, many issues would come to light at an early stage. “But if you turn a blind eye and say what happens at the subsidiary level is the subsidiary’s problem and not the chief auditor’s problem, I don’t think the world will work this way,” Pandey said. added.
Pandey also disagreed with certain sectors’ claims that corporate failures of the past few years were an anomaly, and questioned why regulators should do anything about it.
“This is another argument for doing nothing. We should not ignore one or two corporate failures as isolated cases. We should analyze and see what corrective actions can be taken. “We need to consider whether that is the case,” he said.
Pointing out that now is the time for India, Pandey expressed confidence that GDP will reach $55 trillion by 2047, as recently predicted by former chief economic advisor Krishnamurthy Subramanian.
“If IT services giants like TCS and Infosys can rule the world, there is no reason why CA cannot become a global giant and rule the world.
Compliance with global standards is required. If they had said that we have our own IT standards, IT policies or software standards that are not in line with global standards, would TCS or Infosys have been founded and become so big? The world is integrated, so we adapt, but we have to follow global standards. It’s very important,” he said.
