Financial Daily from THE HINDU group of publications
Tuesday, Dec 31, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 31, 2002 |
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Corporate
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Auditing `Fixing' audit reports may no longer be easy K.R. Srivats
NEW DELHI, Dec. 30 IMPERSONATING an auditor for signing the financial statements of enterprises may now not be all that easy, with the Institute of Chartered Accountants of India (ICAI) making it mandatory for an auditor to mention the membership number along with his or her signature in the auditor's report. This requirement forms part of the Auditing and Assurance Standard on `The auditor's report on financial statements' cleared by the ICAI Council at its meeting at Nagpur on December 26. "This auditing and assurance standard is one of the most important auditing standards on the statute book for auditors. It establishes the standards on form and content of the auditor's report issued as a result of an audit performed by an auditor of the financial statements of an entity," the ICAI President, Mr Ashok Chandak, said. He agreed that the stipulation of mentioning the membership number could at best be a deterrent for impersonation, especially in the cases of small firms and proprietary concerns. "The institute has come across various cases of impersonation, especially in Bangalore. The police had been informed and action was taken. We got to know about these cases only after reference was made to the institute. If the membership numbers are given, it would be easy for small firms to ascertain the genuineness of the person concerned," Mr Chandak told Business Line. The membership number would have to be given in all the reports that an auditor is required to sign on. "This will have to be done on every assurance and auditing report including tax audit reports," Mr Chandak said. Audit reports issued in compliance with the new auditing and assurance standard would, apart from normal contents, also include a statement that the financial statements are the responsibility of the entity's management and the statement that the responsibility of the auditor is to express an opinion on the financial statements based on the audit. The auditor's report would also describe the audit. It will have to specify that audit includes (a) examining on a test basis, evidence to support the amounts and disclosures in financial statements, (b) assessing the accounting principles used in the preparation of the financial statements (c) assessing the significant estimates made by management in the preparation of the financial statements and (d) evaluating the overall financial statement presentation. The auditing and assurance standard (AAS) in the financial statements also lays down the principles to be followed by an auditor while modifying the report.
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