The proposed entity, DigiLocker, is anticipated to have additional applications in enhancing audit quality for large and top-tier corporations.
The National Financial Reporting Authority (NFRA) intends to request that auditors of these organizations employ the platform for storing client records and audit files. According to an insider familiar with the situation, auditors may gather all necessary documents and files for the audit ahead of time and then save them in the DigiLocker entity.
Once saved, auditors cannot append further documents, and there is no possibility of tampering with stored records. The NFRA is expected to initiate discussions with the Ministry of Electronics and Information Technology to include the DigiLocker entity in its scope.
During the announcement of the Union Budget for 2023-24, Finance Minister Nirmala Sitharaman proposed the creation of an additional DigiLocker entity, which would be utilized by MSMEs, large corporations, and charitable trusts. The purpose of the entity, as she stated, is to securely store and share documents online with relevant authorities, regulators, banks, and other business entities whenever necessary.
The plan outlines that relevant documents will be time-stamped and stored in the DigiLocker to maintain the date of submission. Both auditors and the NFRA will have access to the files as needed. This initiative comes in response to various instances of auditors and companies tampering with audit-related records and files.
The DigiLocker entity will be an extension of the existing DigiLocker and will enable companies to store documents online safely and securely. The goal of this initiative is to improve audit quality and ensure more discipline, providing benefits to both the company and stakeholders, according to an insider.
Established in 2018, the NFRA regulates auditors of listed and large companies, with over 8,000 companies under its jurisdiction. One of its functions is to make recommendations to the central government on the formulation and implementation of accounting and auditing policies and standards for companies or their auditors.
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