July 18, 2019

Audit Firm Partners Facing Any Disciplinary Proceedings To Be Barred From Signing Bank Balance Sheets, States RBI

[ By Bobby Anthony ]


The Reserve Bank of India (RBI) has directed that audit firm partners who are in the midst of any disciplinary proceedings will be barred from signing the balance sheet of any bank or even engage in any audit process.

This would also apply to chartered accountant firms which face no ban from the RBI or the court and they could be forced to pull out some of their senior partners auditing any bank.

The RBI has also put in place a system to exchange notes with auditors every quarter, amidst a divergence in the asset quality of banks.

During such meetings to exchange notes, RBI officials would share their observations on provisioning and other issues which, if necessary, may be incorporated by the auditor in the financial results for the next quarter.

It may be recalled that auditors have been pulled up by central investigative agencies and even the assets of a few have been frozen.

The RBI’s recent communiqué on auditors to banks comes at a time when a senior auditor is believed to have told an investigative agency that in several cases it was unclear whether the RBI would view ‘evergreening’ of loans as an “acceptable business practice” or a “fraud”.

Until recently, bank auditors could clearly define their role and defend themselves, but ever since the RBI widened their role, it has become far more difficult for auditors to distance themselves if there are lapses on the part of banks.

Related Post

latest News

  • Justice S Muralidhar asks lawyers to avoid ‘My Lord’ or ‘Your Lordship’ while addressing him

    A few years ago, the High Court Bar Association had asked its members to prefer addressing Judges as “Sir” or “Your Honour”, though many lawye...

    Read More
  • Bank Of Baroda Moves SC Against Calcutta HC Order

    The Bank of Baroda (BoB) has announced that it has moved the Supreme Court challenging a Calcutta High Court order in a case regarding a bank guarante...

    Read More
  • Credentials of 267 million Facebook users exposed

    In the latest case revolving around data breach this year, personal data of 267 million Facebook users was exposed online on a database. Earlier this ...

    Read More