Institutional EYE

Commentary on Corporate Governance Issues

If the ‘market knows’, why doesn’t the auditor?

Auditors are considered market fiduciaries, because they validate the fairness of financial statements. Resignation of auditors and frequent changes in auditors are considered early warning signals by most investors. Even so, we ask if the audit industry considers its responsibility towards a company’s stakeholders while writing out scripted audit reports. The market frustration over the lack of accountability of the audit industry led to SEBI using its discretionary powers over market fiduciaries to regulate auditors. SAT overturning SEBI’s ban of PriceWaterhouse, legally tenable no doubt, misreads market expectations and leaves open the question of their accountability yet again. There nee

Infosys: Is this all overdone?

Given the damage that the Infosys episode has caused, one can argue that the company should have been more forthcoming. There were occasions when the company could have made a full disclosure and if nothing else issued a holding statement. It could have done so when the letter was first received or after the board meeting where it was decided to investigate this fully or when tasking its auditors to do so. But conversely, there is such a thing as opening yourself too much through excessive disclosure. Does a disclosure of an investigation into a whistle-blower complaint fuel more fears or does it provide comfort? What if the board feels the complaint is frivolous, but it turns out that there

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