Reserve Bank extends 'rest' period for auditors to 6 years - The Smart Investor
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“Rest” and trust
This refers toAnup Roy’s report “Reserve Bank extends ‘rest’ period for auditors to 6 years”(Business Standard, July 28). The grounds for longer rest period for statutory central auditors(SCAs) of banks given in RBI circular dated July 27, 2017 more than justifies the enhancement of rest period for SCAs from two years prevailing since 2001 to six years. They are also suggestive of unethical practices being followed by professionals and banks in tandem.
Let us concede that regulatory oversight alone cannot ensure best practices of governance in organizations which manage huge resources including public funds. And diminishing public trust in professionals is a matter for worry not only for the government or regulators, but for the common man and the taxpayer. In the given case, even the possibility of lateral movement of individuals from one CA firm to another can reduce the impact of forced ‘rest’ periods. It is difficult to build trust and honest behavior through statutes or directions.
In this context, the only option left is strict self-regulation by professional bodies. The institute of CAs, RBI and banks should expose unethical approaches by individual CA firms and their employees and where proved guilty the firms/individuals should be punished. If there are legal hurdles, GOI need to come to help them out.
M G Warrier, Mumbai