The country’s apex audit body Comptroller and Auditor General of India (CAG) has called for an increase in fees paid to statutory auditors of all government companies. In a communication sent to managing directors of public sector undertakings (PSUs), the CAG said that with high inflation leading to audit cost escalation and increased compliance burden on auditors, it was “prudent’’ that the fees paid to auditors should be raised.
“Considering the volume of work, category of professionals deployed, growth in companies and rise in cost of audit due to inflation, it is necessary that the audit fees are increased,” a CAG official told , requesting anonymity.
While it is for the managements of the respective companies to take a call on the issue of fixing audit fees, a missive from the CAG is likely to be taken seriously by PSUs, the official said. There has been negligible increase in audit fees paid by PSUs over the past few years.
The CAG’s suggestion on increasing audit fees follows a series of correspondence it carried out with the Institute of Chartered Accountants (ICAI) which has been pushing for a hike to make the job of carrying out statutory annual audits for PSUs lucrative for the domestic CA firms.
Statutory audits of big PSUs often involve more than one CA firm. For instance, NTPC had engaged 6 firms in last year’s annual audit while IOC and ONGC had employed 3 and 5 audit firms respectively. Although larger firms are more generous with the fees paid to auditors, the problem lies with the smaller PSUs which shelve low amounts.
“We take PSU audit as our responsibility to the society and not as an opportunity to make money. But with the cost of compliances increasing, we feel that adequate compensation should be given to PSU auditors,” said ICAI president Uttam Prakash Agarwal. He said that with greater compliances being undertaken to keep up with the stricter norms introduced by the CAG last year, there was a need to adequately compensate auditors for it.
With PSU audit fees often as low as Rs 20,000-25,000, the increase in the fee structure will surely improve quality of the audit process, another official said. Since government auditors are being paid substantially lower fees as compared to CAs working in the private sector, the CAG’s proposal, if taken in the right spirit, will help enhance the quality of audit in PSUs.
Sir,
Our company is a small PSU having Rs.70 Crs turnover and Rs.9.5Crs share capital oly. Now the statutory auditor is asking a fees Rs.2.10 lakhs. Pls advise me whether this big amount fees is required to pay? Pls advise how to fix the stautory auditor fees.
After going through the four comments on this subject, I am compelled to think that the CAs are spastics, without even the basic knowledge of the fundamental principles of living in the present age. I know of several instances all over the country where, like quacks masquerading and practising in remote villages as doctors, non-matriculate (with bogus/forged graduate degrees)income tax practitioners have filed AUDIT REPORTS in Banks, ITOs, etc., signing as CAs. When CAs’ institute cannot stop all this, how can and why should they expect increased remuneration for doing audit for and on behalf of the CAG, and when all know that most of them are actually paid employees of big corporations/businesses. How can people forget the scams in the case of a huge IT company in the recent past. Which junior most CA does not know that if one has to become big money maker in the profession, he must spend money on building contacts with power lobbies in govt and pvt. sector both by bidding farewell to all norms of morality. honesty, truth, and such foolish things?
The royal treatment the PSUs are compelled to give to the auditors on their visits, the standard of audits done by the audit firms in these cases, the undebited expenses that these PSUs willingly incur during the pleasure trips of auditors, of course all firms with very strong contacts and networks, are mind boggling.
Auditing in India is a BIG FARCE. Only small firms carry out real audits and in respect of tiny business units.
In India, in respect of audit and law firms alike, the principle is: BIG IS BEAUTIFUL ! And, therefore, MONEY IS SWEETER THAN HONEY !
The state of affairs in the domain of chartered accountancy profession is indeed rather filthy, but NOT IN ANY WAY DIFFERENT OR MORE APPALLING THAN THE OVERALL SITUATION PREVAILING IN THE COUNTRY EVERYWHERE, in all aspects of life. Without contacts and “networking” nothing can be achieved. Right from the top most bureaucratic position in the government down to the lowest job in the government, (not to talk of the private sector where gog eat dog has been the underlying principle for ages), one needs “jan-pehchan” plus the CONSIDERATION MONEY-and not once, but in regular monthly flows. If a government office clerk has to shell out 2-3 lakhs of rupees to obtain a job, can he remain above board? In all municipalities (even in communist-ruled states), police, DDA-like organizations, and all kinds of public service providers’ offices, corruption is naked and one just cannot reach the top most functionary in any of these offices. Even if one does, it requires contacts and requisite fees. And, even after all this, the highest officers will never intervene in the well-oiled machinations of the system as they themselves are direct beneficiaries of this very system. [For example, does anyone know the email id of the municipal commissioner of MCD?] Most alarming is the fact that in an a very high-profile NGO purportedly FIGHTING CORRUPTION IN INDIA ON BEHALF OF AND FUNDED BY AN OUTSIDE INTERNATIONAL BODY, there is unthinkable extent of intrigues and power fight for ages just to enable only one group of people with connections remain in power and control of its affairs so that they can enjoy the influence and glamour of being its office bearers till death, either as advisors of CVC or CBI or by remaining as members on various government bodies. And the only contribution of such all-old men’s/senior citizen’s clubs is to publish reports on corruption in the country every year and their rewards are frequent foreign trips to attend “Global anti-corruption conferences”. In this scenario, only the most naïve of the persons, including CAs who are treated as “spastics” among CAs by their successful “brothers”, can think of better days with level=playing field for all who have toiled to pass the CA exams. Those CAs and Advocates who remain unsuccessful year after year in becoming members of income tax tribunal know the ground realities better, and also know as to how CBI enquiries are either dropped or closed/hushed up to enable some persons making it. So why grudge? Once one is in the field, there is no question of not playing according to the (unwritten) rules of the game-whether it is getting a job in the civil service, or getting a particular posting in a particular place for a given number of years, or getting a post-retirement assignment as a member of a commission or a post-retirement five-year foreign posting (exclusively reserved for the IAS alone), or a member of a vigilance body, or getting well-paid audits to further a CA firm’s future interests, or even winning a post in a professional body enabling the people to rub shoulders with the powers to be and also to ensure the financial and social/political future of the firms’ owners, or even to get the job of a driver in a government office, THERE IS NO WAY OF GETTING ANYTHING FREE OF COST. It is a basic question of investment and return. “Pay and take away”-this is the motto from the top most to the beggar in the street. After all, we live in a democracy!
And, those shedding tears on this situation of nakedly overwhelming and all-pervading corruption, should ask themselves the question if the pro-mass governments busy in erecting monuments and the CPI-M led governments in the enlightened (but poorest) states of the country, talking of ideals and people’s democracy, are all absolutely free from corruption and happen to be epitome of honesty and integrity-both in politics and administration. The background of the personal staff selected by the ministers of the fiery union ministers from the citadel of left-oriented enlightened state is a tell-tale commentary on this aspect.
So, dear CAs, please have faith in this all-pervading corrupt system of India and, indeed, if you still nurture any qualms/hopes about honesty, please give up practice and go out in the streets with begging bowls outside temples/churches/mosques/gurdwarasand stop complaining.
Or, else, pay for your survival.
The two comments above reflect a rather gloomy picture of the profession of CAs in India, especially those who are still aspiring to start practice as independent CAs without the help of any GODFATHER either in the profession (say, father’s, or family practice of years) or in the Ministry of Company Affairs or, the best, in the Income tax department itself, as many CAs of today’s fame and prosperity once did, of course as agents of those godfathers. As a well informed person, it cannot be denied that, without the support of “OUTSIDE” patrons, and without at least one partner ever being a “PAST” office bearer of their professional body, no one can really survive any more in the practice. This is plainly because of the reasons mentioned in the two comments, however unpalatable these are to those concerned. Otherwise, why was the election of the ICAI this year so controversy-ridden and like the general elections? In other words, there must be some special motive other than service to and upliftment of the profession and its standards for which crores of rupees are being spent on these elections. Naturally, therefore, the politically powerful and influential big business can just obtain the signatures of the biggest of the firms on the dotted lines below their audit reports, duly manufactured in their own backyards. And everybody stands to gain in the process. Then why should the big CA firms/CAs, who even “manage” transfer and posting of the entire IRS/Income Tax Deptt., including the lowest functionaries, really bother whether their poorer “brothers” live or not?
The moot point is therefore that there is nothing other than the “Tonic-M” as the only lubricant in every walk of life, including the learned professions.
It is really thrilling to read what Mr. Banerjee has comented on this subject. He has presented a vivid account of the state of affairs.The professional fraternity will definetly agree with him on the points raised therein. Hats off to Mr. A.Banerjee for his daring comments on the subject.In fact the smaller firms are denied opportuniies on many corners. The ICAI and the CAG should realise the that not by the count of numbers, but only by the inherent quality alone the Professional excellancy can achived. All those Aduit frauds surfaced in recent years of do not involve any small firms. As long as the opportunities are not given, the inherent tallents of smaller firms are continued to be subdued by the BIG FORCES. The ICAI and the CAG should find out a promising solution to this
This is a very welcome, though inexorably delayed, move, though what ultimately happens is a million-dollar question. Not merely the fees-structure, it is also necessary for the CAG to examine various other issues on a most urgent basis. Forst, the time allowed for doing the audit (including branch audits of banks, etc.) is so ludicrously short that not even an army of CAs can do justice to their brief. This would appear to be rather a conscious and deliberate ploy to ensure that not much prying into the accounts of PSUs is even remotely possible by the largest firms (necessarily the domestic extension counters of big foreign firms!), but the ultimate loss is to the country.
What is thus needed is not only enhanced fees structure, which should not be discriminatory favouring the big ones alone keeping only their status in mind, but also reasonably prestigious too so that the CAs, however small they are, do feel proud to work for the President of India/Pariament of India, the CAG being a constitutional authority.
Moreover, the time permitted to complete the audit should also be as much as the CAG itself takes in taking up and finalising the reports in respect of REvenue as well as Commercial audits.
The other thing the CAG must ensure is a reasonable standard of transparency in granting audits to firms, big and small alike. As of now, there is a feeling among the smaller forms, not well-connected in the power-corridoors of Delhi or by dint of the influence-building positions held in the past by the partners of big firms in the ICAI councils alone are “entitled” to corner the audits of big PSUs, like what happened in respect of the stock-taking audit of the FCI many years ago. In fact, let there be a level-playing field more well disposed towards the smaller firms with no one to canvass their cases in Delhi so as to ensure that they too survive and are not crushed by the bigger fish who maintain plush and well furnished “offices” in the capital for liason.
I hope, the CAG will consider these aspects, even if the ICAI does not.