'Knowledge of various legal jurisdictions must for auditors'
Auditors and chartered accountants (CAs) must have a solid knowledge of different legal jurisdictions to tackle liabilities, according to industry executives.
Anish Mehta, chairman of the Institute of Chartered Accountants of India (ICAI), Dubai Chapter, stressed that an understanding of legal environment is essential for auditors and accountants.
"A solid understanding of the legal environment can help avoid liability or at least minimise risk and take preventive actions... There is an increasing need for professionals to keep themselves aware of the risks arising from changes in laws and the local and international legal environment which help them in doing appropriate risk assessments and safeguard the businesses and firms from potential litigations," Mehta said while addressing the members of CA fraternity in Dubai on Saturday.
John Lewis, partner at Clyde & Co., and Narasimha Das, associate partner at Crowe MAK, also addressed the forum on auditor's liability and anti-money laundering legislations.
Sundar Nurani, vice-chairman of the chapter, said practicing CAs should adopt innovative ways of gathering the required audit evidence through the use of information technology. "Integrity and ethics should always be preserved. The scope and responsibilities of each party should be properly covered and documented through the audit engagement letters. The expectations from those charged with governance, lenders and the regulators should also be aligned to avoid any expectation gap," Nurani said during the forum.
As the world is going through economic changes with more emphasis on corporate governance and ethics, Anurag Chaturvedi, secretary of ICAI Dubai chapter, said that taking care of and assessing auditor's liability is important both in terms of the reputation of the professional firms and also in terms of the safeguarding financial damages to the investors who rely on the opinions of the auditors.
"It's important for professionals to ensure adherence to guidelines and more attention to documentation of the substance to limit their liability. Different legal jurisdictions have different norms to tackle auditors' liability and therefore knowledge of legal framework is a must while entering into contracts with the clients and deciding on the jurisdictions in case if any disputes arises," he said.
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