Following is the extract (Page 63) from the “white paper on black money” issued by Govt. in Parliament on 21-05-2012. This is the part of Supportive measures which Govt. intends to take.
D.2 Enhancing the Accountability of Auditors
5.2.75 Unlike many developed countries, Auditors in India have not been requisitely accountable, resulting in frequent undermining of this important aspect. Apart from recent cases of distortionary corporate governance involving highly reputed firms, cases are detected regularly by the regulatory authorities where the Auditors have failed to point out gross violations and even blatant misrepresentations. In the absence of adequate effective provisions, the Auditors are hardly ever held accountable for these lapses. Another aspect of this problem is the way in which a firm opts for an Auditor in this environment of low accountability and prevalent evasion, since a strict Auditor ready to blow the whistle can hardly expect to thrive amidst competitors, many of whom may be more than willing to cooperate and compromise at different levels. As a result, a very important regulatory tool is virtually losing its role in contributing towards greater compliance. There will be need in future to look into various aspects of the functioning and regulation of the role of Auditors and various other professionals verifying the declarations and statements made by firms and ensure that there are adequate safeguards and sufficient accountability of such professionals.
Auditors position is an ethical one.This very pertinent thing have long been delinked from most of the auditors And anybody can presume the very epicenter of black money formation is taking place under the nose of these auditors yet Govt.turns blind eye to act upon.Everybody knows how the auditors are hands in glove with the management of most of the companies.This is b’coz there is no regulation or say loose regulation over auditors.The so called accounting regulator plays dual role of regulating the auditor and certification of financial accountant exam who can only audit.In the name of innovative accounting these are the brains behind conversion of legitimate money into black and re-converting the black into white.This nexus should be be broken.Till the time the ethical position of auditor is followed in letter and spirit.. always welcome black money and embrace the situation with disgust..