Govt plans to tighten rule for auditors after instances of misdeeds; to bolster corporate governance framework

New Delhi: The government plans to review the auditing standards as it looks to tighten the norms governing auditors, a senior official has said amid rising instances of corporate misdoings. The Corporate Affairs Ministry, which is implementing the companies law, is working on ways to bolster the overall corporate governance framework. In recent times, some auditing entities as well as auditors have come under the regulatory lens in connection with alleged misdoings at companies as well as for quitting audit work of corporates on various grounds. [caption id=“attachment_4429183” align=“alignleft” width=“380”]  Representational image. Reuters.[/caption] Corporate Affairs Secretary Injeti Srinivas has said the ministry is committed to strengthening the corporate governance framework in the country. In the ministry’s newsletter for the month of September, he also said that close to one lakh companies have been de-registered in the second phase of weeding out of shell entities. The government has been clamping down on shell entities suspected to be conduits for illicit fund flows and names of lakhs of companies that have not been carrying out business activities for long have been struck off from official records. According to the Secretary, the ministry “plans to review the auditing standards to tighten the rules for the auditors”. The Companies Act, 2013, contains elaborate provisions regarding liability of statutory auditors in case an auditor has contravened the provisions knowingly or wilfully with the intention to deceive the company or its shareholders or creditors or tax authorities.