MUMBAI: As more and more loan-related scams come to light in many public and private sector banks leading to a massive pile-up of bad loans, the Reserve Bank of India (RBI) today decided to take auditors to task by warning them of stern punitive actions against them.
In a new circular titled ‘Enforcement action framework in respect of statutory auditors (SAs) for lapses in statutory audit of commercial banks’, the RBI today warned that any SA not following instructions will be met with punitive actions such as debarring them from conducting business with banks.
“To improve audit quality and bring about a transparent mechanism to examine the accountability of SAs in a consistent manner, it has been decided to put in place a graded enforcement action framework to enable appropriate action by the RBI in respect of the banks SAs for any lapses observed in conducting a statutory audit,” RBI said. (AGENCIES)
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