The Hindu Business Line : Auditors to be more accountable

A Department of Company Affairs (DCA)-sponsored committee has sought to cast a responsibility on the auditors to check and report diversion, misutilisation or misappropriation of funds by the company in the auditor's report. Such misdeeds of company managements should be reported by auditors by including this in the Manufacturing and Other Companies (Auditor's Report) Order,1988, the committee has recommended in its report to the DCA Secretary, Mr Vinod Dhall.

The books of accounts of every company are statutorily required to be audited every year by an auditor. The Companies Act lays down the responsibilities of the statutory auditor — what the auditor is supposed to inquire into and the manner in which he would make a report — to ensure that it presents a true and fair view of the accounts of the company.

Companies have been raising funds from various sources for its business needs in general including for certain identifiable plans or projects. The funds can be mobilised through public issues, from financial institutions or banks or by inviting deposits from public. "It is, however, noticed that sometimes companies deploy such funds for the purpose other than the purpose for which these were raised. Currently, there is no specific duty on the auditors to check and report such diversion of funds to the shareholders in their report,'' it said.

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