Audit panels of companies should step up engagement with auditors: NFRA chief Ajay Bhushan Prasad Pandey

July 11, 2024

Synopsis
The primary responsibility of corporate boards is to protect shareholders’ interests and ensure good governance, the chief of the audit regulator said.

Audit panels of companies, comprising mostly independent directors, need to deepen their engagement with auditors to ensure transparent reporting of financials, National Financial Reporting Authority (NFRA) chairman Ajay Bhushan Prasad Pandey said.

The audit committees typically oversee the statutory audit compliances of companies.

The primary responsibility of corporate boards is to protect shareholders’ interests and ensure good governance, the chief of the audit regulator said.

Pandey, who is also the director general and chief executive of the Indian Institute of Corporate Affairs (IICA), spoke at an event of the institute on Wednesday in Ooty, according to an official statement on Thursday.

The event, being held from July 10 to 12, brings together over 50 participants representing the boards of leading organisations across the country to bolster their understanding of corporate governance.

Pandey called on directors to familiarise themselves with review reports as well as disciplinary orders issued by audit regulator NFRA for greater clarity on what is expected of them.

The regulator had found out that the meetings between the audit panels and the auditors had been very brief, and that, too, just before the approval of the companies’ financial results, Pandey had said in May. This went against the principle of an effective "two-way communication", he had said.

His latest statements coincide with NFRA's plans to directly engage a few large listed companies to “sensitise” them about accounting standards and help curb corporate frauds.

[The Economic Times]