Supporting the capital market regulator Sebi's proposal for an independent auditing regulator in India, global auditing and consultancy major PwC has said there is an urgent need to have a strong and powerful watchdog for this business.
"It's a great suggestion on the Sebi's part, but the decision has to be taken by the government, including by the Corporate Affairs Ministry and the Finance Ministry. There has to be a political will and then we can emulate the global example," PwC India Chairman Deepak Kapoor said on the sidelines of World Economic Forum Annual Meeting 2012.
Sebi late last year had said it would write to the India government, pointing out gaps in the regulations for auditors and suggest possible solutions.
The market regulator is already believed to have written to the government to consider a separate oversight authority for auditors, which is independent of audit profession.
Separately, Sebi plans to put in place a proper mechanism "for enforcing compliance with auditing standards by the auditors of listed companies".
Currently, the Institute of Chartered Accountants of India (ICAI) regulates accounting and auditing professions.
ICAI is a licensing-cum-regulating body of the audit and accounting profession in India. PwC's Kapoor said that ICAI is doing a reasonably good job as both a regulator and an institute.
"But we need to move with the times. A number of large countries such as the US and even some smaller ones like Sri Lanka have independent regulator for auditors. But India has not got one. Here also it is a case of India's image being hit abroad as people might say that you don't even have an independent regulator for auditors", he said.
Giving example of the US, Kapoor said the country has separate regulator and an institute for the auditing profession and both of them are doing great jobs.
"The punishment has to come from the regulator for any wrongdoing and not the institute. It is a clear case of conflict of interest. There is indeed a crying need for an independent regulator for auditors. ICAI has done a good job, but there are proven models in other countries for having an independent auditing regulator," he added.