The officials have often pointed out that auditors are supposed to be the conscience-keepers of a company and it is their duty to ring the alarm bells even at the slightest hint of a financial wrongdoing.
In recent times, there has been a spate of actions against auditors, including against PwC in the Satyam case and against Deloitte and BSR in the IL&FS matter.
Markets watchdog Sebi has moved the Supreme Court against the Securities Appellate Tribunal's ruling that had quashed a two-year ban on PwC in connection with the Rs 7,800-crore Satyam scam.
In the IL&FS case, the Bombay High Court has granted a stay on NCLT proceedings against the company's erstwhile auditors, while some auditors were recently arrested by the Economic Offences Wing of the Mumbai Police in the NSEL matter, though they were released subsequently on bail.
Some auditors, including in the case of IL&FS matter, have come under the scanner of the Serious Fraud Investigation Office (SFIO) while National Financial Reporting Authority (NFRA) is looking into alleged accounting lapses at Infosys.
"There are fewer people now who are excited to join the audit profession, primarily due to a narrative that has got built around it in the recent times," said one of the partners at a leading audit firm, citing actions taken by regulatory and enforcement agencies and the judiciary.
The Institute of Chartered Accountants of India's (ICAI's) former central council member Vijay Gupta said strict actions taken so far against auditors have meant that they have to undergo unwarranted scrutiny by authorities all the time, thereby constantly being under the scanner.
This is dissuading the new talent from pursuing auditing as a profession, he added.
"Any young talent passing out from a professional course prefers to have freedom to practice his or her ideas in real life so as to explore one's self professionally. Sadly, auditing as a choice of profession is facing more roadblocks in the present scenario," SHRM (Society for Human Resource Management) India CEO Achal Khanna said.
The head of a leading executive search firm said new talent is more excited to join consulting roles than becoming part of an audit firm.
"Liability mechanism for auditors is an area that needs to be duly addressed. Drastic actions are being taken against auditors even before being proven guilty," said an auditor at a leading audit firm.
He questioned the rationale behind banning an entire audit firm, saying such moves have a larger impact on the industry and on people working in such organisations.
According to him, such actions would keep high-quality talent away from the audit profession and create an atmosphere of fear, trigger a spate of resignations by auditors and thus might impact investors in a big way.
"Lack of quality talent will create further challenges for the audit profession in the country as the quality of audit would suffer, impacting the output around which major investment decisions are taken," private equity investor Sandeep Parwal said.
Experts opine that availability of trustworthy financial information on performance of companies is important for proper functioning of a market economy, but the entire auditing system has got into a precarious situation as questions are being raised around integrity of auditors.
Serious concerns arise if auditors' independence is compromised or when trust reposed in them gets betrayed as independent audits are fundamental to taking informed and correct investment decisions.
Generally, auditing is a lucrative profession with high-salaried positions. The duty of auditors are discharged by chartered accountants.
Set up under an Act of Parliament, the ICAI is the apex body of chartered accountants.
"Founded with about 1,700 members, the Institute has today 2,91,698 members as on March 31, 2019," as per the institute's annual report for 2018-19.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.