Revisiting The Responsibility Of Auditors In Identifying Corporate Fraud Under The Indian Corporate Governance Framework

Full Text Link

Shraddha Jain, LLM, Chanakya National Law University, Patna

ABSTRACT

Corporate fraud has become a persistent and structural challenge in the Indian corporate landscape, exposing weaknesses in prevailing systems of governance and corporate accountability. Auditors, as independent professionals responsible for scrutinising corporate financial disclosures, occupy a vital position in the identification and reporting of fraudulent practices. This paper analyses the statutory and regulatory framework defining auditors’ duties in relation to fraud detection in India, with particular emphasis on the Companies Act, 2013, auditing standards, as well as the role of regulatory and supervisory authorities. It analyses statutory reporting obligations, disciplinary controls, and the evolving role of auditors in the evolving corporate frauds, like Satyam scam, IL&FS, and DHFL. The study highlights the gap between regulatory expectations and audit practice, demonstrating that audit failures often stem from deficiencies in professional scepticism and judgment rather than the absence of legal provisions. The paper concludes by emphasising the need for strengthened audit quality, effective enforcement, and enhanced governance mechanisms to reinforce the role of auditors in fraud deterrence and corporate accountability.

Keywords: Corporate Fraud, Auditors’ Responsibility, Corporate Governance, Fraud Detection, Companies Act 2013, CARO 2020, Audit Expectation Gap, NFRA

131. REVISITING THE RESPONSIBILITY OF AUDITORS IN IDENTIFYING CORPORATE FRAUD UNDER THE IN

Download REVISITING THE RESPONSIBILITY OF AUDITORS IN IDENTIFYING CORPORATE FRAUD UNDER THE IN • 350KB