Of audits and irregularities

This refers to ‘Arun Jaitley faults auditors, management for PNB fraud’ (February 21). Readers may recall that more than decade ago, there was a change in the way auditors were appointed for banks — from appointment by RBI to appointment by the banks themselves. Now it appears the Government may change the norms again, perhaps in light of the recent huge financial irregularities. A proper system of audit by turn or rotation of auditor is a must. Auditors should assume not only greater responsibilities but also be independent.

Good governance and professional ethics should prevail in the functions of ICAI members. Though scams surface every now and then, the ICAI appears to have done precious little to pull up erring auditors and cancel their membership.

Rotation of audit partners instead of the audit firm is the right option to start with. Why doesn’t the ICAI come out with two professional channels — one catering to business/industry focussing only on accounting/financials and the other a superior one for audit purpose alone?

The finance minister blaming the management of PNB and its auditors is unconvincing, and a little too late. He is answerable to the allegations of negligence during the last four years of NDA rule when the fraud was brewing and there were many indications that it was developing into a mega scandal. It is an open secret that appointments of top executives are political. Hence, their decisions are all based on political considerations. This has led to a fall in the performance of banks and corporate governance standards. To stem the rot, top-level appointments should be made by an independent professional body in an objective and transparent manner purely based on merit-cum-performance. Unless there is a paradigm shift in the approach to top-level appointments, the performance of PSBs is bound to deteriorate further.

Chennai

In the wake of the two large scams that have surfaced in the public sector banking system, it would be ideal if banks go in for a thorough inspection of all their borrower accounts to check whether all precautions have been taken and all terms and conditions of sanction adhered to while disbursing credit, and all follow-up procedures are in place.

With the way large borrowers have been behaving, taking advantage of unscrupulous bank employees, it would not be a surprise if more skeletons tumbled from the cupboards of banks if proper inspections are conducted on huge loan accounts. Even in consortium advances lent by a cluster of banks, there is the possibility of members of the consortium lending in excess of their allocations circumventing discipline to be in the good books of borrowers.

Chennai

The NPA crisis has induced the Government to become more vigilant. Hence, banks will lend only to reliable but small takers. Besides, everything falls under GST, so there is greater monitoring of payables and receivables. When both sides are in the clear, there is no harm in lending.

Faridabad, Haryana

This refers to ‘Politics and the art of theatrics’ by Narendar Pani (February 21). Theatrics and our politicians go very well together and can not be separated even post elections.

More often than not at political rallies it is the announcement of populist schemes and criticism of the Opposition that wins cheers from the crowd, and speakers know very well what to emphasise in their speeches. It is a sad irony that good governance does not generally not follow after these leaders are elected.

Yes, there is ample scope for a non-politician to make a mark in Indian politics, Arvind Kejriwal is an example of it, but then how manycan become true mass leaders and provide good governance which is a really tough job? That’s the million-dollar question.

Noida, Uttar Pradesh

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