Having an experience of over three decades in the profession of chartered accountancy, Amarjit Chopra has donned many hats during his tenure in the Central council of the Institute of Chartered Accountants of India (ICAI). Striving to restore the lost credibility in the profession post the Satyam scam, Chopra has chaired several committees, including the Accounting Standard Board, the Financial Reporting Review Board, the Expert Advisory Committee, the Committee on Corporate Governance, among others. In an interview with Shruti Srivastava, Chopra says he is committed to resolving the maximum number of cases during his tenure so as to ensure greater transparency in the institute. Excerpts:
What steps are you taking to make auditors more responsible towards their work?
In our council meeting, we have decided that every person, when signing or rendering an assurance function, has to furnish a Firm Identification Number (FIN) along with his membership number. We have given every member an FIN. We want to make sure that the person who is signing is not able to say later that the appointment was not in his name. Accountability would be fixed this way. You should be very clear whose firm’s name is in the appointment, especially when you are allowed to float many firms with the same name.
There have been some recommendations from the institute for outsourcing the internal audit of a company...
In the high-powered committee report on the Satyam scam, we have proposed that internal audit be outsourced and not be in-house so that there is more independence. If the auditor is from the organisation, it is as good as being an employee of the organisation and the chances of remaining unbiased decline. Market regulator Sebi through clause 49 and the corporate affairs ministry through the Companies Law should make it mandatory that the internal auditor is from outside the organisation.
Have you also proposed the Big Four be allowed in the country to fix accountability?
Let us be very clear that there is no Big Four. It is only the Big Two. PwC and Deloitte are already working in India but as for KPMG and E&Y, they are there in a surrogate manner. They can’t undertake any audit function but they are doing so and we can’t do anything about that right now. We are looking at ways to tackle this. The report (the HPC report on surrogate practices in India) will also come. We will submit to the government not later than August 31, clearly laying down what we think on the matter.
But what can the institute possibly do to curb this menace?
Why do we have to look at only these Big Four? We only look at the Big Four because they have resources. But if someone says that Indian firms don’t have such resources and infrastructure as the Big Four, I don’t agree. Probably they (Indian firms) have better infrastructure and database than the Big Four. In competence level, they are better than the Big Four. The International Federation of Accountants (IFAC) must start promoting a larger number of firms and this monopoly of the Big Four must be broken. IFAC must under all circumstances promote at least 500 firms to make them better than the Big Four. Is it difficult for IFAC to promote 500 firms? It is in the interest of the accounting profession that the monopoly should go. The more the monopoly, the lesser the independence. So IFAC must break this monopoly, they should start creating a larger number of firms and must come out with a plan on how the firms can be developed in each jurisdiction. Do we want to say that we don’t have the power to develop other big firms?
What are your views on credit rating agencies?
There should be some penal provision for them also. If you are willing to put behind bars some auditors without the charges being proved, then why not credit rating agencies? If you have rated some firm and the company goes bad then why that person shouldn’t be harassed? Has he not cheated investors? The rating agencies get into the details of the company. Their due diligence is as much as that of auditors. Then why not punish them too? There should be a separate regulator for them. Sebi regulates with regard to the class of functions they can undertake and nothing beyond that.
http://www.indianexpress.com/news/must-break-audit-monopoly-of-the-big-four/648391/0
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