Auditing watchdog NFRA engages with audit committees and independent directors at the time of inspection of audit firms to gather their perspectives as part of larger efforts to improve audit quality as well as corporate governance, according to a senior official.
Amid instances of corporate misdoings and auditing lapses, regulators are taking various measures to strengthen the framework for financial reporting.
At an international conference organised by the National Financial Reporting Authority (NFRA) in the national capital, its Chairperson Ajay Bhushan Prasad Pandey on Tuesday batted for harnessing big data and artificial intelligence to enhance the accuracy of financial reporting.
In recent times, the watchdog, which carries out inspection of audit firms, among other activities, has also passed orders against some auditors and audit firms for lapses.
Against this backdrop, the NFRA Chairperson said that during the inspection of audit firms, the regulator also engages with audit committees and independent directors to understand their side of the story.
"This will strengthen the hands of the auditors and improve audit quality and thereby corporate governance," he said.
Addressing the conference on 'Transparent Financial Reporting and Audit Quality - Pillars of Corporate Governance', Corporate Affairs Secretary Manoj Govil stressed on the need to implement regulatory frameworks and structures that are sound and robust to protect the interests of various stakeholders.
"It is in this direction that transparency in financial reporting and high-quality audits play a crucial role in inspiring investor confidence, facilitating informed decision-making, and fostering a culture of trust and credibility within the business ecosystem," he said.
While mentioning about the works of CEOs and CFOs, Govil highlighted that preparers of financial statements have a greater responsibility and the values and ethics of their business drive eventual stability and growth in the economy.
"Financial statements of companies must provide a true and fair view of the financial position and its performance which is achieved by following the accounting standards and providing adequate disclosures which are understandable by the stakeholders in general," he said.
Govil also said the ministry will continue to collaborate with stakeholders, leverage technology, and enact progressive reforms to reinforce trust, accountability, and sustainability in the corporate sector.
Pandey said, "We are in the midst of the fourth industrial revolution powered by big data and artificial intelligence. We need to harness these technologies to enhance accuracy and ... of financial reporting".
Meanwhile, the corporate affairs ministry has started a comprehensive review of rules and regulations.
An extensive public consultation process has started and the ministry expects to finalise the proposed changes to further improve the ease of doing business by the time the new government comes to power, a senior official said.
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