ICAI PRESIDENT ON BANK AUDIT

Breakthrough in Our Efforts with Regard to Autonomy of Bank Audit: I am glad to communicate that, in a major breakthrough with regard to the autonomy of bank audit, the Government has agreed to handle the selection of auditors for state-run banks on its own instead of leaving it to the public-sector banks, as a result of our effective advocacy for a need of auditors’ appointment by an independent regulator such as RBI instead of some public-sector bank doing that on its own. We had expressed concerns over a possible laxity in the audit followed by lenders and possible
overstatement of profits. The Ministry of Finance is expected to issue guidelines in this regard soon. We had been repeatedly representing before the Ministries (of Corporate Affairs and Finance) regarding that practice of management self-selecting auditors in public-sector banks, as that was not ethical given the conflict of interest. The selection of auditor in most state-run banks was being done by the bank management.