Skip to main content

Reserve Bank extends 'rest' period for auditors to 6 years


Central bank has extended the rest period of statutory auditors to at least 6 years
The Reserve Bank of India (RBI) on Thursday criticised private and foreign banks for appointing the same set of auditors alternatively after mandatory rest of two years, as such practice establishes a “comfortable relationship that may lead to compromise in strict adherence to audit principles.
As per the extant rules, a statutory auditor has to be appointed for a period of four years and then there should be a rest of two years. Now the central bank extended the rest period to at least six years.
According to RBI, in some cases in private and foreign banks, the same audit firm was reappointed after a gap of two years’ rest. In a few other banks, the immediately preceding statutory auditor firm was appointed on completion of the four-year tenure of the current statutory auditor.
“The statutory central audit responsibility in such banks thus remained confined to two audit firms which were appointed on a cyclical basis,” said RBI in a notification on its website.
Criticising these banks, the central bank said the rest and rotation policy in the appointment of auditors have been mandated so that books are looked at afresh, “as a new team is likely to examine the issues in a bank from a different perspective.”
In order to make the banks follow the policy in letter and spirit, the central bank said that an auditor, after completion of its four-year tenure in a bank “will not be eligible for appointment as SCA of the same bank for a period of six years.”
The central bank’s directive assumes importance in the light of wide divergence found in the books of some private sector banks, which reported much lower NPA in their books for FY 16 than what the central bank auditors later found. If the divergence found is more than 15 per cent from RBI’s perspective, it is now mandatory than banks disclose the information in the annual report.
The Business Standard, New Delhi, 28th July 2017

Comments

Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Coffee-Toffee, the GST Debate Continues

Hundreds of crores of rupees in the form of taxes ride on the exact categorisation of products Is Parachute hair oil or edible oil? Is KitKat a chocolate or a biscuit? Is a Vicks tablet medicament or confectionery? For the taxpayer and the tax collector, this is much more than an exercise in semantics -hundreds of crores of rupees ride on the exact categorisation.
As the government moves closer to rolling out the goods and services tax (GST) on July 1, many such distinctions are being debated so that no ambiguity remains. Not just that, the government is revisiting old tax cases that were lost over product categorisation, according to people with knowledge of the matter, presumably with a view to making sure that revenue collections can be maximised. “In the past, several tax officers had challenged some of the product categorisations, including those in the retail segment, but lost out in court or at appellate level,“ said one of the persons. “Now we have a chance to go ahead with speci…

Deposit gush:-CA Institute Bats for Special Audit