ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Wednesday brushed aside the apprehension expressed by certain auditors regarding the SECP’s decision to create a “Panel of Auditors,” which according to them has probably been designed to favour some big audit firms.
According to the SECP, “the apprehension is incorrect and, on the contrary, the intentions are otherwise and efforts have been made to create compatibility between the capacities of the auditors and the requirements of the audit of a particular company. This creation of panel and its periodic revision will promote more professional work.”
The had invited applications on January 8, 2008 from Chartered Accountancy firms so as to create a SECP “Panel of Auditors.” Applications were initially called for up to January 31, 2008, was subsequently extended to February 29.
On this initiative, some constructive proposals were received but there also appear to be some apprehensions expressed in the print media and or in written submissions to the Commission.
The SECP said that this initiative was being misinterpreted by some audit firms, therefore it probably needs to be reiterated that the creation of panels of auditors is designed to expand the number of auditors available for specialized audit work and not restrict the Panel which would be available for appointment of auditors of NBFCs, Insurance Companies, Modarabas, Brokerage, non-banking listed companies and non-listed companies with paid-up capital of Rs7.5 million or more by invoking the powers under section 506 BB of the Companies Ordinance and section 48 of the Insurance Ordinance.
The Panel of Auditors is proposed to be developed by the SECP for listing audit firms for auditing of companies in different sectors like NBFC, insurance, non-banking listed companies and non-listed companies having paid up capital exceeding Rs7.5 million.
There is nothing absolutely new in the initiative taken by the SECP. The State Bank of Pakistan (SBP) has already issued a Panel of Auditors which it maintains under Section 35 of the Banking Companies Ordinance, 1962. The SBP requires scheduled banks and DFIs to appoint their auditors from among this approved panel. The panel is periodically reviewed by the SBP to accommodate new applicant firms and also to upgrade/downgrade the firms on the basis of emerging evidence regarding them.
The SBP panel is already being used for banks and DFIs and these being too few auditing firms on that panel, the SECP has decided to create approved Panels of Auditors primarily so that: “The choice of the companies to appoint qualified and experienced auditors gets expanded to a fairly reasonable number of auditors which is not too restricted. “The auditors appointed by a company have the knowledge of the specific sector of the business of which he is going to conduct audit.”