'Audit committees should learn from past lapses flagged by NFRA'
statutory auditors of their company to ensure the company’s accounts are thoroughly checked keeping in mind the failures detected in other companies.These could be in the areas of related party transactions or inter-corporate loans. Pandey cited an instance where ₹3,500 crore was diverted from an entity to a subsidiary and then to another company linked to its major shareholder.
The audit committee of the main listed entity should have questioned the objective of the fund transfer in this case, Pandey said. Pandey also emphasized the need to ensure the adequacy of internal financial controls in the company.Mint last week reported, quoting sources, that India's top eight auditors will be inspected, and the financial statements of up to 60 of their clients vetted this year, as the national audit watchdog widens its efforts to enhance audit quality countrywide.
The NFRA, which last year inspected five auditors involving audit reports of 24 clients, is planning to expand the exercise. Milestone Alert!
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