Reserve Bank of India (RBI) governor Shaktikanta Das has underlined the need to further strengthen the country’s audit system and make it even more foolproof. The governor said that fair and impartial audit system is the cornerstone of any economy and that the RBI in association with the Institute of Chartered Accountants of India (ICAI) have already taken steps to improve the audit system of banks and financial institutions.

"With globalisation and increasing complexities of the financial system, audit as a public good has become vital for a sound, stable and vibrant financial system," Das said, while addressing officers at the National Academy of Audit and Accounts.

He added that auditors are the first line of defence that can act against any financial fraud.

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Recently, the RBI imposed a ban of two years on audit firm Haribhakti & Co –the auditor of SREI Infrastructure Finance after it failed to comply with a specific direction of the central bank relating to statutory audit. The ban kicks in from April 1, 2022.

Amid several corporate frauds, the role of auditors has often come to light.

“Economic decisions are increasingly made based on the available evidence and information. Inaccurate information may lead to suboptimal decisions or excess resource allocation, which would be neither in public interest where a public authority is involved, nor in the interest of individual stakeholders,” Das said.