IS AUDIT A REGULATORY CONTROL?
Is audit a regulatory control or a financial norm which needs to be followed on an annualized basis or is it something beyond that? Given the complex nature of organizational existence, government, public sector and the private sector, one would at its wits end, to fathom out the purpose for which audit happens with prescribed regularity. Twenty years back in one of the government departments I headed, was also tasked with the task of internal audit, the audit was done, the audit reports created, but there were rarely any compliances. Perforce, I stopped for nearly 22 months.
The overall purpose of audit is known, theoretically! What it is supposed do in that year, in the current scenario and the specific ecosystem remains unknown. Same exercise is repeated again and again for no purpose. Let the country take an audit call for all its main entities, as to what would be nature of audit and with what consequences. Govt, public sector and private sector apart is the world of NGOs, the think tanks, the profit making not for profits and above all the babas, swamis and the sanyasis in their business avatars. Can they left out of the clutches of audit? Being left out audit’s clutches means being left out of the ambit of law.
Though you would have heard of a variety of audits; financial, physical, performance, operational and what not, the running system believes in cursory or camouflage audit, however voluminous the reports might be. It cannot be more pitiable situation, when the Supreme Court had to direct NGOs to submit audit reports, which most of them had not. Or on the other hand audit report pertaining to 2G with the guiding parameters still unknown and at least in hindsight it gives a very clear-cut feeling that is more of a flight of fancy. Audit, criminals cases, elections and power at times have become part of the same game or so it seems.
The faith reposed in the Big Four for auditing / transacting by big corporates seems to be more for using their names, in case of an issue. This can be called defensive audit or covering the audit trail. However much they mess up any audit they come out unscathed. This is the audit miracle of our times. The financial audit that is being performed endlessly on corporates and the financial health of the company does not correspond to it. The IL & FS story, it was not only the auditors, it had more than a dozen bureaucrats hanging around for handsome salaries and financial perks. About Satyam the less said the better, the PNBs of today and all have been audited, NPA imbroglio et al. Intensive forensic audit on a mass scale is the only answer. Do we have energy, resources and inclination to adopt forensic audit as the prime audit methodology? Will Indian businesses be able to survive it? Or will we take the tooth out of forensic audit and live peacefully in a world of financial scoops.
WHO WILL AUDIT THE AUDITORS?