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NFRA aims to make Annual Transparency Reports mandatory

The National Financial Reporting Authority (NFRA) has made the proposal to make Annual Transparency Reports mandatory for audit firms. Information such as operational activities, management governance and ownership structures and other crucial information will be contained in this report.

The proposal of the NFRA is to make this report for the owners, auditors and the stakeholders to ensure more transparency and ensure lesser chances of fraud. Stakeholders can even submit their own feedback to the company. It will boost audit qualities. The proposals are on the lines of some of the international best practices implemented by independent audit regulators. In recent years, bias and inability to draw out fraudulent activities of big companies and businessmen has led to an increased need for a system to implement more transparent and evident audits of these business entities. In India, the cases of Adani Ltd. and Nirav Modi has triggered such requirements.

 The proposed disclosures assume significance in the backdrop of concerns about the working of large audit firms and conflict of interest involved. These firms provide both audit and non-audit services to the companies.

https://economictimes.indiatimes.com/industry/services/consultancy-/-audit/annual-transparency-report-may-be-must-for-audit-firms/articleshow/97038969.cms

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AI to be introduced in Public Government Auditing Space

Artificial intelligence has been coming from a little while now. Little by little, it is taking over a lot of jobs for people but also improving costs and performance and accuracy in large sectors. The most recent news on Artificial Intelligence comes in the field of Auditing, where AI is set to be a game changer in the public auditing domain as it will help in quicker and more effective and more detailed analysis during both planning and execution phases. The presence of AI, with a little training and phasing can create an errorless and fast system.

High-level delegations from eight Shanghai Cooperation Organization (SCO) member countries attended the 6th meeting of Supreme Audit Institutions (SAI) to discuss cyber security and artificial intelligence, as well as the role of SCO auditors. Among topics discussed was introducing AI systems for auditing in Asia and how much control to give to the new born technology. The audit also covers user access controls, including multi-factor authentication, and provides an assurance that the organization is compliant with overall legal frameworks prescribed for cybersecurity

https://economictimes.indiatimes.com/industry/services/consultancy-/-audit/artificial-intelligence-to-be-a-game-changer-in-government-audit-space-cag/articleshow/97701026.cms

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Tax Base to be widened with Stricter Audits

Following record GST collection, the Central Board of Indirect Taxes and Customs (CBIC) is creating a strategy to broaden the tax base through tighter audits and inspections.

CBIC chairman Vivek Johri told ET in a post-budget interview that there is a lot of room to broaden the tax base and combat tax evasion by actively using digital forensic techniques, data integration, and artificial intelligence. So far, the board has discovered a revenue shortfall of 22,000 crore due to tax audits of 51,000 GST return filings and a revenue shortfall of 2,200 crore due to tax scrutiny of 31,000 GST returns. "We intend to actively use audits and inspection to improve compliance. We have made significant progress in terms of return filing %, but it is insufficient "Johri stated. "We also need to look at the quality of data that taxpayers are included in their returns."

 According to Johri, the budget's focus is on customs simplification.

He stated that while the board eliminated several exemptions last year, it has maintained some exemptions this year where there was either a "strong recommendation" from the ministries in accordance with 'Make in India,' or where they did not receive "timely inputs" from the industry or stakeholders.

https://economictimes.indiatimes.com/news/economy/policy/tax-base-to-be-widened-with-stricter-audits-cbic-chief-vivek-johri/articleshow/97560987.cms?from=mdr

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Big 4 Companies continue to rule India’s auditing market

According to an analysis conducted by ET Analysis recently, three of India’s big 4 companies, EY, KPMG, and the Deloitte group of affiliate companies were at the top of the Auditing companies on the chart at the end of the 3rd Quarter of 2022 (Q3, 2022).

 All the big 4 companies in India use certain affiliated entities to carry out auditing activities. The KMCG Companies will audit 147 companies, with EY Group being the leader with 153 assignments. The Big Four, which include the multinational accounting networks Deloitte, EY, KPMG, and PricewaterhouseCoopers, are the world's four largest professional services networks. The four are frequently grouped together because they have similar revenue and workforce sizes to the rest of the market, are thought to be equally capable of offering a broad range of professional services to their customers, and are seen as equally desirable networks to work in by those looking to start careers in professional services, primarily accounting. This is due to the fact that these start-ups routinely collaborate with Fortune 500 companies.

 Even during this cycle, major auditors have been wary about recruiting clients, particularly in the real estate and infrastructure sectors. According to Sudhir Soni, head of audit at BSR & Co LLP, audit firms carefully evaluate client approval as well as other variables such as governance, hazards, and industry knowledge. Over the last two years, the industry leader, EY group, has actively added important audits to its portfolio.

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