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Thursday, Jul 18, 2002

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Rating of auditors on the anvil

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NEW DELHI, July 17

AT first glance, it may not sound plausible or relevant. But industry circles are coming around to the view that rating of auditors may be one of the best ways to reassure investors about the professional integrity of the chartered accountants and the credibility of the financial statements that are being vouched by them.

"We have mooted the idea of rating of auditors and initiated talks with rating agencies like ICRA'', Mr Shailesh Haribhakti, Chairman of the Assocham Corporate Governance Committee, said here today. Mr Haribhakti is also the Vice-President of Indian Merchants' Chamber.

The Securities and Exchange Board of India had recently announced its intent of putting in place a framework for rating of corporate governance practices.

Even as a view exists among certain regulators that rotation of auditors may be the answer to the problem, Mr Haribhakti pointed out that India had the largest percentage of rotating auditors as both the banking sector and the public sector were being audited by rotating auditors.

"A large percentage of our economy is already audited by rotating auditors. This will get eventually extended to the private sector also. This will happen and there is nothing wrong in this'', he told Business Line here.

The mandatory rotation of auditors in the private sector has been a topic of intense debate in the country in the last few years. There have been divergent views on the matter.

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