SEBI panel for rotation of partners of audit firm every 5 years

MUMBAI: The Chief Financial Officers of listed companies can be any person with financial or accounting background, a Securities and Exchange Board of India committee has said, setting aside a proposal by the market regulator to appoint only chartered accountants as CFOs.
The SEBI Committee on Disclosures and Accounting Standards (SCODA) has suggested that person who possesses “experience in financial or accounting or any other comparable experience or background which results in the individual financial sophistication” can be appointed as CFO of a listed firm.
SCODA wants that persons with requisite financial qualifications could be appointed as CFOs of the audit committees of the listed companies, said a discussion paper, ‘Proposals relating to amendments to the listing agreement,’ on which the regulator has sought opinion from stakeholders by September 25. Following the Satyam fiasco, the SEBI board held the view that CFOs of listed companies should be chartered accountants and asked SCODA to explore the possibility of prescribing a professional qualification for such functionaries.
The committee (SCODA) also proposed that the partners of the audit firm signing the audited accounts of any listed entity may be rotated every five years and the audit committee will be responsible for ensuring independence of the audit firm and the partners. Internal auditors
Further with regard to role of internal auditors of listed firms, SCODA said that it would not be prudent to get the internal audit function performed by an external auditor.
The reason it gave behind the suggestion was that an in-house commissioning of internal audit would allow the auditor to have a detailed insight into the business of the organisation.
“The Audit Committee is given the responsibility to review the performance of internal auditor (which)... provides adequate checks and balances as far as internal control mechanisms are concerned,” the discussion paper said. — PTI