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K.R. Srivats

NEW DELHI, April 18

THE Government today expressed reservations on whether the recent cap imposed on non-audit fees that could be earned by an audit firm from a client goes far enough to give confidence to the public that there is a congenial environment for auditors to perform their fiduciary responsibility to the society.

Expressing such reservations at a national workshop on "National accounting atandards: Towards international best practices", organised by the Confederation of Indian Industry (CII), Mr Vinod Dhall, Secretary, Department of Company Affairs (DCA), also called for toning up the existing disciplinary mechanism against errant chartered accountant firms.

"The record of disciplining any player who is remiss in performance of duty is poor," Mr Dhall said.

The Institute of Chartered Accountants of India (ICAI), a self-regulated organisation, had recently ruled that its members could not receive non-audit fees in excess of audit fees earned from a client. The move was aimed at ensuring "auditor independence''.

Mr Dhall also held that company secretaries should be made responsible for compliance with all elements of corporate governance in both letter and spirit.

The DCA Secretary also indicated that the Government might appoint a "body of independent professionals" who will randomly pick up company accounts for scrutiny.

"The company management and auditors would be summoned to explain deficiencies in accounts. A system for disciplining companies, auditors and company secretaries would be put in place to take care of situations where the shortcomings are inexplicable," Mr Dhall said.

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