There are still a few issues to be sorted out on the Naresh Chandra Committee report, which has recommended that an audit firm, along with its subsidiaries, associates or affiliated entities, should not derive not more than 25 per cent of its business from a single corporate client.
The committee was set up to look into corporate governance. According to N Santhanam, the chief financial officer of Nicholas Piramal, in order to sort out these issues, audit firms should be appropriately graded according to the kind of business which they can undertake.
The grading of auditors can be done by taking into consideration the number of partners, the standing of the firm, the revenue earning capacity of the firm among others.
