New Delhi (Agency): Instances of auditing issues at companies have been growing, leading to actions against auditors who have made mistakes. The Chairperson of the National Financial Reporting Authority (NFRA), Ajay Bhushan Prasad Pandey, stressed on Monday the importance of audit documentation to address these problems.
Audit documentation is the proof of an auditor’s work. It supports the conclusions and opinions given in the audit report. This means that it shows how the auditor got their results and what they think about the company’s financial situation.
During a webinar called ‘Audit: a pillar of corporate governance’, Pandey said it is important for auditors to have good audit documentation. He pointed out, “If you have done the audit documentation then tomorrow you can justify your work. If a certain question arises, then documents are the only thing to back on.”
Pandey believes there is a lot of room to improve audit documentation. When documentation is not done properly, it can put the auditor in tough situations. It can also make it harder for companies to show that they are using money correctly and following all the rules.
Pandey, who is the head of NFRA, also emphasized good corporate governance practices. This is especially important now, as more ordinary people are investing in the stock market.
NFRA, which is a newer organization, has about 7,000 companies, including those not listed on the stock market, under its watch. In the past year, NFRA has passed various orders to discipline companies.
“We don’t want to be seen just as a disciplinary organisation but as an organisation that is supporting corporate governance, supporting auditing professionals,” said the NFRA chief. This means NFRA wants to help companies follow the rules and help auditors do their jobs better.
Last month, Pandey said that audit documents should prove that due process has been done. This means that auditors should show they have followed all the rules and steps in their work. He also said that auditors should not just depend on expert opinions. Instead, they should make sure they are doing their job thoroughly and not just “ticking” boxes.
