INSUBCONTINENT EXCLUSIVE:
from taking fresh audit assignment depending on the magnitude of it.
The regulator said the quantum of punishment will depend on the
magnitude of divergence from the prescribed norms and the auditors would be provided sufficient hearing before action is taken.
Although
statutory auditors play important role in contributing to financial stability but their role has recently been called into question for
lapses in bad loan classification
RBI had found significant divergence in asset classification in almost all leading banks including ICICI Bank and Axis Bank.
RBI said it
will put a graded enforcement framework in place to enable take action for their lapses such as providing wrong certifications, giving wrong
bankers said that detect loan frauds or provide an early warning also falls within the scope of their responsibilities but given the paucity
of time for auditing, this has never become a reality.
In case of those auditors whose audit quality or conduct is not found satisfactory,
RBI said it would not approve their appointments for undertaking statutory audit in commercial banks for a specified period.
RBI will
examine non-adherence to its guidelines in audit, the extent of the violation, i.e., the difference between the figures in audited financial
statements and the actuals, the frequency of the violation, and most importantly the impact of the violation.
Further, RBI may also not
approve auditors, who have been debarred by other regulators
Chartered Accountants of India, the professional body of the audit community, in the loop whenever it takes any enforcement action,
including issuance of cautionary advice, on an audit firm.
