Govt should fine the 'Big 4' audit firms for lapses, says Amit Tandon of IiAS

There have been several instances of accounting irregularities surfacing in India Inc off late. What are some of the biggest concerns on financial reporting and should investors without accounting knowledge only invest in companies with very high governance standards? Amit Tandon, MD, IiAS and JN Gupta, Former ED at Securities and Exchange Board of India (Sebi), answered these questions.

“We need to remember that the Big 4 auditors audit about 65 percent of the top 500 companies and of course it is much lower than what you have seen in the US and UK where it is upwards of 95 percent but it is still a fairly high number. So the question is whether it is going to be disruptive and against that, you need to ask the question that has the Big 4 audit firms been providing the assurance which they have promised to provide all these years. If the answer is no, then we need a solution. If the answer is yes, I would suggest that we need to put a fairly high fine on these companies and get on with life,” said Tandon on Friday.

“The auditors, the rating agencies, the independent directors are all gatekeepers for the minority investors because they are the people who are in the boardroom within the management circles, circling around there interacting with them as against the investors were sitting outside and watching what is going on. So they have to play a far more responsible role,” he said.