Upholding Audit Quality: Lessons from Non-Compliance

National Financial Reporting Authority

In matter of CA Akash Goel

In the intricacies of tax and financial world, auditors are also known as a watchdog. Auditors play a pivotal role in maintaining transparencies, accuracy and reliability of financial statements. They are responsible for safeguarding the interests of stakeholders by verifying the veracity of the numbers presented in the company. However, the recent case of CA Akash Goel shed light on professional skepticism and negligence of professionalism in his responsibilities as auditor. The case explores the critical nature of adhering to professional standards and the dire consequences which can arise from the negligence in auditing practices. This article will delve into the significance of compliance with the Standards on Auditing (SAs) and the implications of falling short of these standards.

Auditors are entrusted with the responsibility of evaluating financial statements to ascertain the truthfulness and accuracy of organizations. Standards on Auditing (SAs) are ?set of guidelines which provide framework for conducting audits and maintaining the highest standard of professional conduct. The SAs serves as a beacon, guiding auditors through each step of the audit process. In the case of CA Akash Goel, SAs has been continuously infringed in auditing process which led to skepticism his professionalism, addendum, lack of diligence in his work.

Ca Akash Goel found himself in multiple allegations which he was unable to negate. He was an experienced auditor, who has failed to integrate the basics of his professionalism with SAs. He has failed to prove his legitimacy of his appointment which further proves the lack of diligence in accepting the audit engagement.

Akash's lack of proper documentation and compliance with auditing standards (SA) led to serious charges of professional misconduct. The charges included not adhering to audit engagement terms, not complying with audit documentation standards, and failing to follow procedures related to materiality, risk assessment, and obtaining sufficient audit evidence.

To make matters worse, Akash issued an audit report with an unmodified opinion despite significant gaps and misstatements in the financial information. This further strengthened the allegations against him. The regulators emphasized that lacking sufficient documentation and not complying with SA's requirements were serious issues that could undermine the very purpose of an audit.

The contention of the case was as follows:

1. The EP is accused of not complying with various SAs, specifically SA 230 (Audit Documentation) and SA 700 (Forming an Opinion and Reporting on Financial Statements).

2. The EP's lack of proper documentation is highlighted as a major concern. The EP is supposed to record details of audit procedures, including who performed them and when, as well as review processes. However, key documentation is found to be missing from the audit files.

3. The EP is also charged with not complying with SA 700, which requires forming an opinion on financial statements. The EP is accused of issuing an unmodified opinion despite significant issues and material misstatements in the audit.

4. The EP's defense includes stating that some required documents were not received from the management and that their responsibility was limited to expressing an opinion based on the information available.

5. The charges against the EP are considered to be established based on various instances of non-compliance with SAs and lack of proper documentation.

6. The EP is found to be negligent in accepting the audit engagement without due diligence, resulting in poor audit quality.

7. A series of penalties and sanctions are imposed on the EP, including a monetary penalty and a one-year debarment from certain audit roles. It is also recommended that the EP undergo further training in order to improve their understanding of SAs and enhance their auditing skills.

As the audit process unfolded, the tale of CA Akash Goel negligence turns out to be costly and non-ignorant. According to SA 230, proper documentation of audit procedure is essential. The audit files lacked the substantiate information of auditing nature and procedures such as the nature, timing, and extent of the audit procedures performed. This proves the lack of credibility and a cast deficiency over CA Akash Goel’s work.

The tale of allegation does not rest here, apparently it is vaster. He was charged with SA 210, SA 700, SA 300, and, SA 315. Moreover, he was accused of failing to assess risks, overlooking material misstatements and rendering an audit opinion without adequate and proper investigated evidence. These charges bring forth the need for auditors to uphold the principles of SAs diligently.

He was confronted with a series of charges, each pointing to various instances of non compliance with the Standards on Auditing. These charges highlighted his failure to assess risks accurately, overlook material misstatements and provide an audit option without substantial evidence.

There sometimes a silver lining in the cloud. Amidst the shadow, Akash Goel found a ray of hope in the verdict. The regulators found Akash guilty of professional misconduct. They imposed penalties and sanctions on him, including a monetary fine and a one-year ban on being appointed as an auditor. They also recommended that Akash undergo training to enhance his auditing skills and knowledge of auditing standards.

?The case of Akash Goel serves as a cautionary tale for auditors and professionals across industries. It highlights the imperative of meticulous compliance with professional standards. Auditing is not just a technical exercise; it is a moral and ethical commitment to financial transparency. Negligence can lead to severe repercussions that transcend monetary fines.

The saga of Akash Goel illustrates the monumental impact of negligence and non-compliance with auditing standards. It underscores the unwavering importance of following the SAs to maintain the trust and credibility of financial reporting. As we navigate the intricate world of auditing, this case serves as a beacon, guiding auditors toward the path of vigilance, ethical practice, and unwavering professionalism.