Commendable RBI Audit Norms

The Reserve Bank of India (RBI) audit norms recently announced should usher in credibility, transparency and also rejuvenate the profession of auditors in India. The erstwhile Industrial Development Bank of India (IDBI) had first mooted the idea of joint audit in the 1980s on the lines of audit of public sector enterprises. The joint auditing practice in the case of public sector companies had proved to be widening the base of auditors for undertaking audits.

When the idea of joint audit had been earlier mooted by the erstwhile IDBI, it was not acceptable to the Institute of Charted Accountants of India and the companies. The thought was not pursued. However, companies which had subsidiaries abroad were audited by the auditors in the respective countries who knew the accounting standards and laws governing the companies more intimately there and on cost consideration. By this logic, it would be more appropriate and time-saving as also for better use of the talents in different audit firms, transparency and pinning down the responsibility, the audits should be conducted by more audit firms spread over in different locations. The corporate audits could therefore be conducted more conveniently on a joint basis by more than one audit firm and the branches of companies could be audited by local audit firms.