Auditors in India are not well Compensated

Tighter restrictions and fewer fees are making the auditing profession difficult, according to panellists at an international conference hosted by the National Financial Reporting Authority (NFRA) here on Tuesday.

The pure audit business model is facing serious challenges. Uday Kotak, former managing director and CEO of Kotak Mahindra Bank stated that the situation is becoming increasingly difficult in terms of conflict avoidance.

He stated that while regulators would like the best talent in the auditing profession, they “would have an issue if the quality of talent deteriorated.” If the supply (of talent) drops dramatically, we could face a crisis during our growth period,” Kotak remarked.

Meanwhile, auditors are increasingly being fined by the NFRA. Auditors are concerned not only about penalties but also about the possibility of criminal procedures if corporations commit fraud.

For example, in May, the Supreme Court allowed the Serious Fraud Investigation Office (SFIO) to resume criminal proceedings against IL&FS auditors Deloitte Haskins and Sells LLP and BSR and Associates LLC for their suspected involvement in the NBFC’s financial fraud.

According to NFRA chairman Ajay Bhushan Pandey, auditors in India are underpaid, while working under great pressure.

He said, “I’ve seen a few companies that are listed on both the NYSE and the Indian stock exchange. There is a significant discrepancy between the auditing fees received by auditors abroad and those received in India. I don’t understand this because the task is practically identical.”

He claimed that auditors in India have to work in a hostile environment.

“Auditors are required to demonstrate professional scepticism, but when they begin to do so, some management resists. The auditors who are doing this job should be fairly compensated,” Pandey stated.