life in financial markets: auditor peer reviews on index companies in india

Here is something on the new auditor peer review rule in Indian equity markets that I wrote (for the magazine I work for) recently:

Peering into auditors

The Securities and Exchange Board of India (Sebi) is struggling to oversee a problem-free implementation of its own mandate on a review of the statutory auditor’s audit of the 2007-08 accounts of companies belonging to Sensex and Nifty indices.

Sebi wanted the companies to pick an auditor from a panel of auditor firms that had no audit connection with their business competitors or with their own past audits. “With experienced auditors being a handful and being connected with competing companies, this literally leaves no auditor of required experience to do a peer review,” says the head of accounting standards in a leading financial consulting firm.

While Sebi had to be seen as doing something with regard to the fallout from Satyam Computers’ falsified financials, questions are being asked whether the peer review solution will efficiently serve the purpose of detecting poor audit processes by auditors.