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Whistle-blowers' complaints ought to be considered by auditors

Wednesday - February 26, 2020 10:54 pm , Category : BUSINESS
New Delhi, Feb 26 (IANS) The Ministry of Corporate Affairs (MCA) has mandated auditors to consider whistle-blower complaints against companies in their audit process.
An official statement said that the Central government has notified the Companies (Auditor's Report) Order, 2020 (CARO, 2020) in line with its objective of strengthening the corporate governance framework under the Companies Act, 2013.
"CARO 2020 would necessitate enhanced due diligence and disclosures on the part of auditors of eligible companies and has been designed to bring in greater transparency in the financial state of affairs of such companies," it said.
"The auditor is to consider whistle-blower complaints received during the year by the company in his audit."
The statement also said that the the auditor, in its audit report, should disclosure the details of proceedings against the company for holding 'benami' property and whether the company has disclosed the details in its financial statements.
"The auditor has to take into consideration the issues, objections or concerns raised by the outgoing auditors before forming his opinion," it added.
Further, the auditor is required to report about the company if it is a declared wilful defaulter by any bank, financial institution or other lender and is also required to report as whether any fraud by the company or any fraud on the company has been noticed or reported during the year.
And if a fraud has been noticed, the nature and the amount involved is to be indicated, the MCA statement said.
It said that the CARO, 2020 is expected to significantly improve the overall quality of reporting by the auditors on the financial statements of the companies and thereby lead to greater transparency and faith in the financial affairs of the companies. This is automatically expected to greater inflow of investment by and in Indian companies.

--IANS rrb/vd