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Monday, 15 November 2021
Suggestion That can change the Assurance Services Future
Idea to Change the shape of the CA
profession with respect to assurance services
Disclaimer: The idea will not be acceptable to the established and well reputed
CA firms and Chartered Accountants
Objectives:
1.
Increasing the real level of Independence
2.
Eliminating back-end solicitation
3.
Equal Opportunity to every Chartered Accountant
4.
Uniform Audit Pricing with no scope for
undercutting
5.
Better reporting and statutory compliance
6.
Establishing the reputation of the profession
Method to
be used for Auditor Appointment:
Blind Appointment Method where neither the auditor or the
appointor does not know each other till the appointment materializes.
Procedure
to apply the method:
1. Website: Create a website for appointment of
statutory auditors for all audits mentioned in any Act like companies act,
income tax act, gst act etc.
2. Database of Auditors: Maintain a database of the Auditors
in that website. The data may be extracted from the MEF
3. Application by the Appointor for appointment
of auditor:
a. Any person requiring an auditor
should require to submit a request for such appointment within a given time
period. The time period may be different for each type of audit or based on the
category of the Appointor.
b. Fine should be levied on the Appointor
if it fails to submit request within a given period.
c. The Appointor should provide its
various address throughout the world in that form
d. The Appointor should mention its
important financial information like Revenue, Profit, Stock, Fixed Assets, Net
worth etc. in that form
e. The Appointor should mention one
unique thing to differentiate it from others like PAN, CIN etc.
f. The appointor should mention the MRN/FRN of the Chartered Accounts who are already associated with the appointor so as to exclude those Chartered Accountants as auditor of that entity.
4. Auto calculation of Audit Fees:
a. Based on the address and financial
information submitted by the Appointor an audit fees before taxes would be
displayed to the Appointor
b. The Fees once displayed it is non
negotiable and should be accepted by the Appointor before final submission of
the request form.
5. Communication to Auditor:
a. Based on the data submitted by the Appointor
an artificial intelligence will decide the Auditor
b. Basic things to be remember while
choosing the auditor is local auditor should be given priority so as to
minimize the cost and each auditor in the data base should be given an
opportunity to do the audit.
c. While running the Artificial
Intelligence biased things like the auditor should have prior audit experience
in those like companies should be avoided, so as to give opportunity to the
newcomer.
d. At the time of communication to the
auditor the auditor should only know the area and fees for the audit and not
the client’s name.
e. The auditor should accept or reject
each list of audits submitted to him
6. Final Acceptance by the Appointor:
a. After the acceptance by the auditor
the Appointor should be prompted to deposit the audit fees
b. After depositing the audit fees the
name of the client and auditor will be communicated to each other. Prepayment
of audit fees will remove the chances of undercutting and increase the level of
independence.
c. Once done the appointment should be
valid for 3,4,5 years as may be suitable
7. Maintenance of the server:
a. A fee should be collected both from
the Appointor and auditor for the maintenance of the server based on the audit
fees
b. The server should also be required to
be audited so as to check its effectiveness
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