IIM Raipur students got enlightened by the lecture conducted by Mr K.P.Shashidharan, Director General, Comptroller & Auditor General Of India (CAG). New perspectives on the Audit approach followed by CAG during the contemporary period were brought forward.
Mr Shashidharan, started the session by discussing on what grounds Public Sector Units have been created by Government of India. He focused specifically on corporate governance mode of working that relies on following factors:
•Concentration on profitability
•Focus on shareholders’ Interests
•Taking along stakeholders
He elucidated that CAG has the powers to comment upon or supplement the report of the Statutory Auditors appointed by him. Statutory Auditors are appointed by the CAG under Section 619(2) of the Act, to conduct audit of accounts of the government companies. The process of certification of accounts by the CAG, is generally taken up by the audit teams duly approved by the Board of Directors of the company along with report of statutory auditors.
Further Mr Shashidharan explained students on how CAG have distinct and uninterchangeable roles, still have a common goal for ensuring, inter-alia, that the financial statements of the auditee are transparent and reliable documents for the stakeholders.
Speaking about the new Audit system Mr Shashidharan discussed on following topics like:
•Aims of CAG by bringing the new audit approach
•Prerequisites to the New System
•The overall audit methodology
Further he discussed about the three phases on audit methodology which is broadly divided in the following way:
Based on the quarterly financial results (QFR) prepared by the Listed companies and the half yearly results (HYR) prepared by other major companies, audit may be conducted on receipt of QFR of second quarter or first HYR. In case of the companies which do not prepare QFR/HYR, Phase-I audit may be conducted in the months of November-December.
This may be conducted as a test audit at the end of the financial year (i.e. in the month of April) based on the draft accounts received from the PSUs. Timings of audit in this Phase may be different in different companies and may be decided by the DGA/PDCA depending upon when and in what form the accounts are presented by the PSUs.
On receipt of accounts duly approved by the Board of Directors of the PSU and reported upon by the Statutory Auditors, the following aspects may be verified during this phase:
i.Verification of action taken on earlier audit observations.
ii.Compliance with the consolidation/grouping instructions.
As learning to MBA students, Mr Shashidharan shared with future managers to understand more about creative accounting, which is very prevalent and common issue in our country and they should safeguard their enterprise from fabricated accounts. He also threw some light on insider trading which is acting like a plague to Indian industry and has no ready solution in our country.
Students later had many queries regarding the functioning of CAG, role of CAG in 2G Scam, career opportunities for students with Government of India on this front and specific questions regarding the audit process of PSUs.
The session gave students a comprehensive overview on the three phased Audit system by CAG. Shashidharan complimented the students on their keenness to learn about the region. He expressed his desire to come back to the campus and talk more about similar topics.