ICAI reluctant to rotate auditors

ICAI president Sunil Goyal said, ‘‘The matter has been referred to CESURA, which will consider the issue. A final decision is expected to be taken in the next 3-4 months’’.

The committee (CESURA) has around 11 members comprising ICAI’s seven council members and the balance corporate members.

In a major policy shift in 2002, ICAI had taken a decision to make rotation of auditors mandatory on the ground that it would minimise the scope of vested interests created by long relationships between an auditor and a company. It was felt that the rotation of auditors would make the new incoming auditor look at the audit objectively and would also help improving the corporate governance in the country.

Rotation of auditors can be ensured either by an amendment to the Companies Act or by a change in the ICAI code of conduct for its members.

Tajender Khanna, senior partner, HS Rustagi & Co said, ‘‘I am of the view that the rotation of auditor should be there to maintain independence of the auditors’’.

‘‘Rotation would have given some of the small and medium size firms a piece of the cake and a chance to these firms to create infrastructure for themselves and even distribution of work and solve the problem of disguised unemployment,’’ added Rahul Adhlakha, partner, Budhiraja & Adhlakha & Co.

‘‘Rotation of auditors will certainly boost the confidence of public at large. If the rotation does not take place, it can hamper the independence of the auditor and the quality and transparency of audit reports can suffer,’’ said another senior partner of a Delhi-based auditing firm.