Focus shifting from Auditors to Audit Committees

(1)?? The NFRA now expects audit committees to delve deeper into the audit process and related-party transactions.

(2)?? The recent observations of the chairman of National Financial Reporting Authority (NFRA) that the “audit panel of companies cannot escape blame by citing audit failures” has shifted the spotlight from auditors to the audit committee.

(3)?? It is clearly a wake-up call for all audit committees

(4)?? The expectation is that audit committees should now focus on the methodology adopted by auditors and appropriately capture the same in the minutes.

(5)?? They should question the audit process more deeply and satisfy themselves that all angles are well covered.

(6)?? Before the quarterly meetings, the audit committee chairman is expected to spend quality time with the statutory auditors to understand how the limited review or audit was carried out and be satisfied on the process adopted.

(7)?? On related-party transactions (RPT) the role of the committee is to ensure compliance with regulations, arm’s length pricing and adequacy of documents.

(8)?? With the recent developments around NFRA’s expectations, the need of the hour is clear guidelines to audit committees on audit methodology and RPT.

Source:- The Hindu Business Line