The allegation on the audit profession tendering erroneous advice to banks resulting in huge losses by a constitutional authority such as the Central Vigilance Commissioner (CVC) has stirred up a hornets’ nest among the auditors.
The burden of proof apart, the CVC’s remark, in its proposed National Code of Ethics for Chartered Accountants, that ‘erroneous/ambiguous advice tendered by chartered accountants has in some cases led to quick mortality of borrowal accounts in banks and financial institutions has affected practitioners of the profession.
A few CAs to contend, on conditions of anonymity, that no sensible auditor worth his salt would tender willfully wrong advice that can lead to losses for banks.
Errors in judgment also cannot be ruled out. Also, more often than not, auditors rely on the statements of affairs given by borrowers and draw conclusions on their basis. It is also possible that the auditors may have got taken for a ride by unscrupulous loan applicants.
In many cases, the information presented to the bank is not audited and statements are furnished on the basis of prima facie evidence.
Hence, the chartered accountants say, charging the entire fraternity with bias or inability to assess the exact value of debtors-creditors assets and liabilities is not quite correct.
CAs only process the information offered to them by clients and verify the evidence in support, appending a disclaimer note wherever necessary. Hence, there is no lapse or lack of proper exercise of duty on the part of the auditors.
Further, no intentional wrong-doing by audit professionals goes unpunished as there is an oversight mechanism that is competent and efficient to evaluate the degree of professional lapse and award punishments accordingly.
The professional body of auditors promptly conveys to such regulators as the Comptroller and Auditor General of India, the Reserve Bank of India and SEBI about any lapses by auditors.