MCA plans to amend CA Act to remove conflict of interest in audits

The government, in creating disciplinary mechanisms, could consider bringing in disclosure norms for auditors with respect to non-audit services and fees charged by them

The Ministry of Corporate Affairs is planning to amend the Chartered Accountants Act to build disciplinary mechanisms for removing possible conflicts of interest between audit firms and companies they audit.

The government is also looking at ways to address the gaps in the law with respect to network entities of which audit firms are part.

“We need to strengthen the Chartered Accountants Act. Many entities need to be brought within the regulatory remit to create accountability and transparency,” a senior government official told Business Standard.

Determining whether an auditor is independent under current laws, experts say, is difficult because audit firms