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Informist, Tuesday, Nov. 25, 2025

 

By Rajesh Gajra

 

NEW DELHI - The critical responsibilities of audit committees for listed companies under the Securities and Exchange Board of India's listing regulations are relevant, but "probably" not sufficient for protecting the interests of investors and creditors of the companies, Nitin Gupta, chairperson of the National Financial Reporting Authority, said Tuesday. He made these comments in his personal capacity at a corporate governance and financial reporting conference in New Delhi organised by the Associated Chambers of Commerce and Industry of India.

 

Gupta said while the current audit committee report provides basic information such as the number of meetings held in a financial year, "there is hardly any information available to the public on whether the audit committee has done enough to protect the investors and creditors and how the audit committee has discharged those functions and duties which it was expected to."

 

The disclosures to stakeholders do not give what kind of information a company's management had given to the audit committee, Gupta said in response to queries from Informist on the sidelines of the conference. "What we are seeing is a series of failures, corporate governance issues," he said.

 

Pointing to window dressing of accounts as one of the major corporate governance failures, Gupta said at the event that the industry and the regulators need to learn from past cases of scams and governance failures and improve the regulatory framework. NFRA works side by side with the SEBI's actions against errant managements and boards of listed companies by acting against the auditors in such cases, he said. In the past five years, the NFRA has issued 79 disciplinary orders involving 108 actions against audit firms and auditors, according to Gupta.

 

Gupta recommended to the industry associations to frame a model financial reporting template for audit committees designed to improve the information being made available to investors and other stakeholders. 

 

The one-year period for ascertaining the viability as a going concern for companies under corporate laws may be considered to be revised to 3-5 years, Gupta said. A longer period would better determine the viability as a going concern "so that the (corporate) failures can be avoided," he said.

 

Gupta said at the conference that top companies must take into consideration in their risk profiling the potential losses on account of the newly evolving artificial intelligence and cyber-attacks. The extent of financial losses suffered because of AI can be high, as per the findings of a recent global survey of 975 companies by EY which said companies suffered financial losses upwards of $4.4 million due to AI-related incidents, he said.  End

 

US$1 = INR 89.26

 

Edited by Tanima Banerjee

 

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