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In a bid to improve corporate governance norms and prevent fraud, the Indian government is considering stricter rules for auditors and independent directors. The new rules may make it mandatory for auditors to submit a detailed report to shareholders, detailing the reasons for their resignation. Moreover, the regulators are mulling to make it mandatory for companies to hire new auditors if the existing ones resign.
The current spate of auditor resignations has come at a time when the market is facing several headwinds including higher crude prices, sagging corporate earnings, and weaker rupee. The market sentiments have further been weighed down by concerns about the fallout of the IL&FS crisis. As a result, investors are being extra cautious while investing in shares of companies with high debt-to-equity ratios or those that have been impacted by the IL&FS crisis.
An auditor is a person authorised to verify and review the accuracy of financial records and ensure that a company complies with tax laws. Auditors also help protect businesses from fraud and point out discrepancies in accounting methods helping them boost their operational efficiency. The appointment and resignation of auditors by companies need to be intimated to the Registrar of Companies (ROC).
Deloitte has decided to quit its role as the auditor for Adani Ports following concerns raised in a report by short-seller Hindenburg Research. The conglomerate has now appointed MSKA & Associates as its auditor till the date of the next annual general meeting. This is the third change in auditors for Adani group companies in recent months. In May 2023, Shah Dhandharia & Co LLP stepped down as the auditor for Adani Total Gas and was replaced by Walker Chandiok & Co LLP.
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