SEBI to appoint forensic auditors for listed firms
GS PAPER II: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Context: Markets regulator SEBI is looking to appoint auditors for conducting forensic audits of financial statements of listed companies as part of efforts to curb frauds.
What is forensic audits?
- A forensic audit is an analysis and review of the financial records of a company or person to extract facts, which can be used in a court of law.
- Forensic auditing is a speciality in the accounting industry, and most major accounting firms have a department forensic auditing.
Recent developments:
- SEBI has invited applications from eligible chartered accountant firms “for empanelment to take up assignments relating to forensic audit of financial statements of listed companies.
- Application shall not be considered where disciplinary action or proceedings have been initiated against the applicant, its partners or directors, by any regulatory body or court of law.
- SEBI asked listed firms to disclose about the initiation of forensic audit to stock exchanges to address gaps in the availability of information.
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