Our latest report - “The Future of Audit in India”– A series by Grant Thornton, focusses on the topic “Mandatory Firm Rotation” (MFR).
Grant Thornton International has been leading a series on ‘The Future of Audit’ across seven countries including China, Singapore, South Africa, UAE, UK, Ukraine and Belgium (Brussels). The series engages diverse stakeholders to discuss and gain insights into the growing pressures to evolve audit services, both over the short term and further into the future. The inputs from the research and subsequent conversations are designed to help identify future drivers of change and emerging innovations in audit services.
Grant Thornton and Prime Database conducted a joint survey to assess India Inc.’s readiness to meet the requirement of Mandatory Firm Rotation (MFR) and the perceived impact of this important legislation.
A snapshot of survey analysis and its implications is given below:
- MFR is expected to have a significant impact on majority of Indian companies;
- There is an increasing sentiment to embrace the MFR as the new regulatory norm with a view to enhance auditor objectivity and independence;
- 61% of the survey respondents are required to rotate their auditors from FY 2017-18 onwards;
- Out of 1480 companies listed on the National Stock Exchange (NSE), only 131 companies have changed their auditors in the years 2015 and 2016. Survey results also indicate that 82% of respondents are yet to start planning or have only a preliminary plan agreed with the board of directors. Considering the short time span left, this indicates a huge task for the companies and the Indian profession
- A majority of companies believe that MFR adoption should be aligned with the transition to Ind AS;
52% of the respondents expect that there will be an increase in the audit fee in the range between 10-25%.