Posted by CHEN TianCheng, Year 4 undergrad at the School of Accountancy, Singapore Management University
Prior to reading this, I was not aware that in India, there was a different expectation towards external auditors compared to in Singapore, that the external auditors have the onus to detect fraud in their performance of the statutory audit. This is significantly different in Singapore, where our purpose is not to uncover fraud, but to ensure no material misstatements are uncorrected, that can change an intended user’s decision.
This difference is illustrated here in the amendments to the India Company’s Act in 2013.
I also found a PwC’s special report on MCX in India which unveiled 676 related parties other than the 235 that were already disclosed. This discrepancy was unveiled only after decades.
Experts are still questioning the role of auditors in India, whether it is their responsibility to detect fraud, and they bring up valid problems that external auditors face in the performance of audit procedures. If they are required to uncover fraud, it would probably mean that they need to check every transaction and not do the usual sampling processes that is usually performed to ensure no material misstatements.