SEBI to appoint Forensic Auditors for Listed Firms

Security and Exchange Board of India is considering to appoint auditors in a bid to conduct forensic audits of financial statements of listed companies to strengthen its efforts towards curbing frauds.

Highlights

In recent times, SEBI has already conducted forensic audit of several companies. To initiate the process, SEBI has invited applications from eligible chartered accountant firms to take up assignments on forensic audit of financial statements of listed companies.

Background

In October 2020, SEBI had asked several listed firms to disclose information about initiation of forensic audit in October 2020, because gaps were there in the availability of information.

What is forensic auditing?

Forensic auditing investigates if the concerned firms are engaged in financial reporting misconduct. The process applies different skills and methods to determine if there is financial fraud of not. It looks for Economic damage calculations, Bankruptcy, insolvency, Money laundering, Tax Fraud, Securities fraud, Business valuation and Computer forensics.

Does RBI allow Forensic Auditing?

Yes, Reserve Bank of India has also made forensic audits compulsory for large advances and accounts restructuring.

Who can be Forensic Auditor?

Forensic auditors or accountants is not different than financial accountants. But they have some special skills to detect fraud & document it. Thus; any graduate candidate, with at least one year experience in banking & financial sector; will have to clear Certified Banking Forensic Accountant exam to become forensic auditor.

Month: Current Affairs - May, 2021