CA. Uttam P. Agarwal, President, CA. Amarjit Chopra, Vice-President and CA. Anuj Goyal, Chairman, PDC along with other representatives of ICAI had an interaction with Shri P.S. Sharma, General Manager and Shri S. Ramachandran, Dy. General Manager, Department of Banking Supervision, Reserve Bank of India on 9th February, 2009. The major issue was managerial autonomy opted by 14 Nationalized banks and matter relating to Statutory Branch Auditors appointment for the year 2008-09. A brief report of the deliberations is as follows:-
ICAI apprised RBI about the problems arising out of autonomy granted recently by Government of India in the matter of selection of Statutory Branch Auditors (SBAs). While emphasizing the major issue relating to jeopardizing independence of auditors, it was pointed out that lot of implementation problems would also arise. RBI officials stated that as per the legal framework, RBI has no authority to appoint auditors. It’s main role is to grant approval after selection is done by the bank management. They further stated that the autonomy to individual banks was granted by Ministry of Finance. Moreover appointment is a managerial function and RBI comes into picture only at the approval stage. ICAI, however, impressed that the time-tested system followed by RBI was working quite satisfactorily and the same should be made operational once again.
ICAI pointed out that as per the Roadmap issued by the RBI, number of Central Statutory Auditors eligible for the appointment will be more than double in the very next year. Combined with the introduction of 60 : 40 formula, reduction of tenure of appointment, increase in cooling period etc. the waiting period for firms is likely to go up to 6 – 7 years.
RBI was of the view that fees payable to concurrent auditors needs to be raised having regard to areas involving more risk.
Regarding SBAs appointment for the year 2008-09, RBI clarified that while sending the panel of auditors to the bank, the panel sent by the ICAI formed the basis. Two lists have been sent by the RBI to each bank i.e. first list containing the names of continuing auditors which have not completed their tenure and the second list containing the names of non-continuing auditors to fill the vacancies after deleting the names of those firms which are either associated with the particular bank or in cooling period etc. It was further clarified that names of those auditors who are covered under the first list will get appointment letter while auditors falling under the second list may be sent an offer by more than one bank. Auditors receiving the offer from more than one bank have been given clear instructions not to accept more than one offer. At this stage, the ICAI requested the RBI to provide an exceptional list i.e. name of those firms which have not been included in the panel sent to various banks and the reasons thereof. Such an exception list would enable the ICAI to reply to queries raised by members located across the country.
ICAI also insisted that there is no need to do away with Part C auditors because by utilising service of auditor firms in this category would provide an element of continuity and banks will also stand to gain because such firms possess rich experience as well.
RBI informed that it will be seeking clarification about the disciplinary cases as to the meaning of expression i.e. “the case is closed” because it does not convey whether or not the member has been found guilty.
ICAI requested the RBI to consider whether it would be appropriate to revise the category of firms/standing of firms merely on account of the death of senior most partner of the firm.
To modify the clause in norms for categorization of audit firms for their empanelment as branch auditors for public sector banks in case of category IV as 3 years (for the firm or at least one partner) on the same line as given in case of category III and II.
Sources:http://www.icai. org/post. html?post_ id=4056&c_id=91
