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Confederation of Indian Industries (CII), Assocham, and Finance Industry Development Council (FIDC) have all written to the central bank about the problems companies would face in implementing the proposed regulations for appointment of statutory auditors.
RBI under pressure to relax new auditor norms
A cool-off period of one year before the appointment (of auditors) for their independence is not practical to implement, the chamber has said.
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| A+A A- By Express News Service
NEW DELHI: The banking and the non-banking fraternity is not in favour of the new Reserve Bank norms on hiring statutory auditors mid-way in the financial year as it could throw up enormous operational challenges. Industry bodies are up in arms against the central bank diktat, which in its current form, requires mid-term resignation of auditors already appointed for this year and replace them with new firms.
The Reserve Bank of India’s (RBI) rules changing auditors throw up enormous operational difficulties and are disruptive for banks and non-banks, said the Confederation of Indian Industry (CII) in a statement. The central bank, on April 27, asked banks and non-banking financial companies (NBFC), excluding those who don’t take deposits and have below Rs 1,000-crore asset base, to immediately bring in new auditors in case the firm has completed three years of audit of a bank or NBFC. NBFCs may do the change from the second half of the year.
Banks and NBFCs having asset size of Rs 15,000 crore or more were asked to appoint joint auditors. Crucially, a retrospective applicability of the extended eligibility criteria for the auditors, including those relating to provision of audit and non-audit services.
Non-banking finance companies (NBFC) had opposed the RBI move on changing auditors mid-way in the financial year, and had asked the central bank to set up an expert committee instead, with representations from NBFCs and audit firms before coming with rules on audit. The RBI had said in its guidelines that all banks and NBFCs, except non-deposit taking ones below Rs 1,000 crore, should change their auditors. A minimum of two audit firms should conduct the audit, the RBI had said in its guidelines released on April 27. However, NBFCs had the flexibility to change their auditors from the second half of the current fiscal. Prior approval of the RBI was needed for such change in banks, but NBFCs could do with just notifying such change.