Any lack of transparency can undermine trust and confidence in the system> Anita Shah Akella (IA&AS), Joint Secretary of the Ministry of Corporate Affairs
FinTech BizNews Service
Mumbai, February 26, 2024: “Investors and other stakeholders rely on financial statements and sustainability reports to make decisions, and any lack of transparency or accuracy in reporting can undermine trust and confidence in the system," stated Ms. Anita Shah Akella (IA&AS), Joint Secretary of the Ministry of Corporate Affairs, Government of India, addressed the International Conference on Sustainability: Financial Accounting and Reporting. The event was organised by 2024: The Associated Chambers of Commerce and Industry of India (ASSOCHAM). She emphasised the urgent need to tackle greenwashing, stating, "There is a pressing need to address the issue of greenwashing – the practice of exaggerating or misrepresenting the environmental or social benefits of products, services, or activities.”
Ms. Akella highlighted the efforts of standard-setting bodies such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) in developing comprehensive frameworks and standards for sustainability reporting to enhance consistency and comparability. She added, In addition, building resilience in the financial sector has become important given its increasing exposure to climate change risk. To this end, regulatory measures have also been taken to mainstream climate into the financial economy”.
She further said that “regulators are stepping up their scrutiny of sustainability disclosures to combat greenwashing and ensure transparency and accountability. The non-compliance with reporting requirements can result in fines, reputational damage, and legal consequences. SEBI has been one of the early adopters of sustainability reporting for listed entities and has required mandatory ESG-related disclosures for the top 100 companies in a phased manner.
Regarding sustainable investing, Ms. Akella said, “The sustainable investing in India has grown exponentially, with sustainable assets under management reaching a record high of $10.6 billion in 2023, marking a 56% increase from the previous year. Moreover, regulatory reforms such as the introduction of the Business Responsibility and Sustainability Reporting (BRSR) framework have catalysed corporate transparency and accountability. These initiatives not only align with India's commitment to the United Nations Sustainable Development Goals but also signal a fundamental shift towards a more responsible and resilient business ecosystem.”
Dr. Praveen Kumar Tiwari (IA&AS), Full-Time Member of the National Financial Reporting Authority (NFRA), emphasised the crucial aspect of auditors' independence, stating, "Auditor’s independence is the midriff without which the auditor cannot stand erect." He highlighted NFRA's commitment to upholding the standards mandated by Indian laws to ensure auditors adhere to their prescribed positions. "There is no scope for any shades of grey," Dr. Tiwari added, "as it will hit at the very fabric of corporate governance in which audit must thrive."
Dr. Tiwari also expressed concern over the widespread absence of professional skepticism, urging auditors to challenge management assertions rigorously. He emphasised the importance of auditors understanding the gravity of their responsibility and being accountable. "Trust but Verify," a phrase popularised by former US President Ronald Reagan, resonates in this context, Dr. Tiwari noted.
Addressing issues within the Indian auditing landscape, Dr. Tiwari highlighted related party transactions (RPTs) as a common thread in corporate malpractices. He noted instances where auditors failed to report misuse of RPTs to divert funds from public interest entities for private gains.
Furthermore, Dr. Tiwari pointed out areas of widespread audit failures such as provisioning, expected credit losses, revenue recognition, audit documentation, and communication with those charged with governance (TCWG). He cited cases where critical concerns were relegated to the end of the audit report or overlooked entirely, even when a corporate entity faced insolvency.
Dr. Praveen Kumar Tiwari concluded, urging collective efforts to address these challenges and uphold the integrity of auditing standards in India.
The others who spoke during the conference were Mr. Rama Subramaniam Gandhi Non-Executive Chairman, Yes Bank; Former Deputy Governor, Reserve Bank of India; CA (Dr.) Ashok Haldia Chairman, ASSOCHAM Task Force for Accounting standards, Sustainability Accounting and Integrated Financial Reporting; Ms. Preeti Malhotra Chairperson, ASSOCHAM National Council for Corporate Affairs, Company Law and Corporate Governance and Past President, ICSI; Mr. Ankit Sharma Chief Regulatory Officer, National Stock Exchange of India; Ms. Melanie Proffitt Vice President and Global Council Member, ACCA; CA. Kamlesh Vikamsey Past President, ICAI and Past President, The Confederation of Asian and Pacific Accountants.
