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ICAI to examine auditors’ role in PNB scam

The Institute of Chartered Accountants of India has written to the bank as well as the investigative agencies concerned -- Sebi, CBI and ED -- offering to share the information at its disposal.

Published: 17th February 2018 05:27 AM  |   Last Updated: 17th February 2018 05:27 AM   |  A+A-

PNB

Punjab National Bank | Reuters File Photo

By Express News Service

NEW DELHI: The Institute of Chartered Accountants of India (ICAI), the apex body regulating the accounting and auditing standards in the country, announced on Friday that the magnitude of the unravelling fraud involving Punjab National Bank and jeweller Nirav Modi’s firms has prompted it to begin an investigation into whether there have been lapses on the part of auditors. It has also written to the bank as well as the investigative agencies concerned -- Sebi, CBI and ED -- offering to share the information at its disposal.

“ICAI in consonance with its role as regulator, considering the mammothness and modalities of the irregularity that has been perpetrated on the  Public Sector Bank, has suo-moto triggered its disciplinary mechanism,” ICAI stated. According to sources, the institute has triggered a probe by the Financial Reporting Review Board, an arm of the institute that reviews auditing and reporting compliance, to check whether auditors involved with the firms have perpetrated any violations.

The institute has already set up ‘a High Power Group’ to study issues of a systemic nature “and suggest remedial measures and improvement in the banking system to ensure preventive measures to avoid such type of incidents”.

“The magnitude of the scam is what is worrying the institute. If this has indeed happened over several years, it means past audits have failed to unearth the scam. That implies either serious procedural gaps in financial reporting norms or active connivance,” said a senior auditor and compliance expert, who did not wish to be named.



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