Auditors of large firms to keep records in Entity DigiLocker
February 28, 2023
The move comes at a time when there have been various instances of auditors and companies changing or tampering with audit-related records and files.
The proposed Entity DigiLocker is also likely to be used to improve the audit quality of top-tier and large companies, with the National Financial Reporting Authority (NFRA) planning to ask auditors of these firms to use the facility to store client records and audit files.
“The auditor can collect all files and documents that are needed for the audit in advance and can then store them in the Entity DigiLocker. The auditors will not be able to add more documents later nor will there be any chances of tampering with documents,” said a person familiar with the development.
The NFRA is expected to begin talks with the Ministry of Electronics and Information Technology in order to include them in the scope of the Entity DigiLocker.
In the Union Budget 2023-24, finance minister Nirmala Sitharaman proposed the establishment of the Entity DigiLocker, which would be used by MSMEs, large businesses and charitable trusts. “This will be towards storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks and other business entities,” she had said.
Under the plan, The relevant files will be stored in the DigiLocker and time-stamped to maintain the date of their submission, according to the plan. The auditors and the NFRA would both have access to the files as needed.
The move comes at a time when there have been various instances of auditors and companies changing or tampering with audit-related records and files.
The Entity Digilocker would be an extension of the current digilocker and would enable companies to store documents online in a safe and secure manner. “The objective is to improve audit quality and ensure more discipline. It will also benefit the company and stakeholders,” said the source.
Set up in 2018, NFRA regulates auditors of listed and large firms and has auditors of over 8,000 companies under its jurisdiction. Amongst its functions, it also makes recommendations to the Central Government on the formulation and implementation of accounting and auditing policies and standards for companies or their auditors, among other things.
[The Financial Express]
