• DELHI BAR COUNCIL ACTS AGAINST BIG 4 AUDIT FIRMS
• NEW AUDIT STANDARDS ANNOUNCED
BAR COUNCIL DELHI SERVES NOTICE ON FOUR MAJOR AUDIT FIRMS FOR OFFERING LEGAL SERVICES
• Taking cognizance of the complaint filed by the Society Of Indian Law Firms (SILF) Bar Council Of Delhi (BCD) has served notices to 4 major Accountancy Firms, KPMG, Delloitte, EY and PWC for providing legal services to their clients.
• Providing of Legal Services by an Accounting firm is against the provisions of the Advocates Act, 1961
• Till the matter is resolved, BCD has asked these Audit Majors to submit the list of advocates engaged by them and not to provide any legal services
• KPMG and Delloite have submitted their replies and are challenging the jurisdiction of BCD while EY and PWC have sought 6 and 4 weeks respectively to file their replies.
• BCD proceeded against these firms even after the recommendation by an Expert Committee set by the Ministry of Corporate Affairs for amending the provisions of the Advocates Act in order to allow Audit Firms to provide Legal Services.
• Presently Legal Firms are beginning to diversify and compete with Audit Firms for providing services like Mergers and Acquisitions, forensic operations, due diligence etc, therefore the conflict of interest.
CORPORATE GOVERNANCE GAINS FIREPOWER WITH NEW AUDIT STANDARDS SA 701
• To enhance communicative value of Audit Reports
• To make corporate governance strong and transparent
• To inspire faith of investors in Audit Reports and Management.
• Inclusion of Key Audit Matters (KAMs) in Audit Reports
• Sequence and Format of Audit Report has been changed
What are Key Audit Matters:
• KAMs are significant issues that came up in the Financial Audits of the Current Year.
• KAMs to include High Risk areas, Matters involving management judgment and other significant incidents in the financial year being Audited.
• No straight-jacket criteria to determine KAMs. They are subjective to each organization.
• KAMs should serve a supplementary purpose to the facts disclosed in Audit Report and they must not be a mere repetition or in disagreement with the Audit findings.
• Applicable for listed companies.
• KAMs to be included in Annual Reports only