The Karnataka State Chartered Accountants Association (KSCAA) urged Rationalisation of eligibility criteria for appointment of statutory auditors for Commercial Banks (excluding RRBs), Urban Cooperative Banks (UCBs) and NBFCs (including HFCs).
There are genuine concerns arising out of your circular dated 27th April, 2021 which might cause unwarranted difficulties and hardship to banks and chartered accountants.
To Begin with, the CA Body has commented that Most UCBs in the state of Karnataka and perhaps may also be In other states of India. are situated in Mofussil areas wherein majority of the audit practitioners are sole-proprietors or individuals or small / medium sit* partnership limns. and at the drop of a hat by virtue of this circular suddenly rich Arms have lost their eligibility for conducting these audits. This drastically and in a very harsh way eliminates a vast number of small audit firms from the gamut of UCB audits in turn. giving rise to an imbalance between the number of OCRs and eligible auditors This will lead to a Staten where CA arms located in Metropolitan Cities located at far flung places will have to be appointed. which will lead to complete obliteration Further, such a situation will create chaos in the coming days as the eligible partnership firm auditors may not have knowledge of the local language of the state in which the UCB is located. To add to that it will also increase the compliance cost and overheads for the UCBs due to travel, boarding and accommodation cost of auditors and their staff members as assigned for audit.
“While specifying these eligibility criteria it seems to suggest that RBI has completely ignored and disregarded the interest, merits. Scholarships, capabilities. etc. of small and medium audit firms by determining the eligibility criteria merely and simply based on mechanical numbers which would favour only and only large audit firms,” the Body says.
It further said that one way to test the knowledge, skill or capabilities of young audit practitioners could be by way of conducting competitive eligibility tests so that skilled practitioners do not lose out on the opportunity only and only because of non-fulfilment of mechanical and artificial numbers driven eligibility criteria specified in the said circular.
“We believe hardships, concerns and the purported grave injustice caused to our members from small and medium practitioner categories along with suggestions as listed above would invite your kind consideration. We m.e also optimistic that you would definitely make an ‘all out’ effort to ensure that the necessary steps would be taken to provide appropriate relief by easing those harsh and difficult eligibility conditions that are specified in the said circular. This would also serve the national in.rest by encouraging overall development of the professional audit firms from all strata with a level playing field by providing an equitable treatment and distribution of audits to all firms from all categories,” the body said.
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