‘Eliminating the audit’: India’s auditors are the real problem

India’s audit system is in trouble.

In fact, it’s the real obstacle to its growth, says a new report by PricewaterhouseCoopers (PwC).

The report said the lack of audit software in the country’s audit sector has resulted in a “mild” audit crisis and an “imminent” audit reform.

India’s audit infrastructure has been in the spotlight in recent years.

It was targeted by an international audit watchdog after the government failed to provide adequate data on its spending.

The government, however, claimed the issue was due to a “technical fault”.

India has the largest audit system in the world.

It is followed by the United States, United Kingdom and Germany.

In a recent study, PwC said India had one of the most fragmented audit systems in the developed world.

“Audit software, in the absence of a clear definition of audit, has become an important component of a fragmented and incomplete audit regime.

The lack of clarity in the audit process creates a complex and uncertain environment for a number of stakeholders and consequently for the overall audit performance,” the report said.

The PwCM report said India has been the victim of a massive audit crisis, with a “significant” impact on its economy.

It said “the failure to properly account for and control the use of software in India’s financial sector has led to a major financial crisis, which has been exacerbated by the absence and non-existence of audit tools.”

The report also cited the “significant risk” of non-compliance of audit procedures with the government’s policies, practices and guidelines.

“The lack of adequate software audit software has made it difficult for the Government to track the use and expenditure of public funds and has contributed to an audit system that is largely unauditable,” the PwCT report said in a summary of the findings.

In the report, PWC said India’s auditor system is “in need of an audit overhaul”.

The report also said the “mood of the audit community” was “not encouraging”.

“In the past year, there have been some high profile incidents, such as the failure of the Reserve Bank of India (RBI) to provide sufficient information on the cost of capital to the government, and the RBI’s failure to audit its own asset allocation decisions,” the company said.

PwCT said that, while India’s government has provided a “thorough and coherent” audit framework, the “audit system has been hampered by a lack of appropriate software, which is also a critical component of the complex audit process.”

The Indian audit system “is still not sufficiently modernised to support the needs of India’s public sector and the needs and goals of the government”, the company added.

“The audit framework needs to be reviewed and revised to better address the current challenges in the sector.”

The company said it expects the government to “revisit” the audit regime soon.

“We expect that a review of the current audit framework will be carried out to improve its efficiency, predictability and flexibility.

We also expect that the audit framework should be further strengthened and updated to reflect the current evolving audit needs of the country,” the consultancy said.

India is home to the world’s largest private sector and is a “leading” audit market, PWT said.

It cited a study by Pricewell that estimated that India has 1,852,000 companies and 2.4 trillion rupees ($4.6 billion) in assets under audit.