Page 15 - Banking Finance February 2018

LEGAL UPDATE

LEGAL

CASES
CASES
CASES
CASES
CASES

Opportunity for local auditors Sebi fights to retain con-
Companies will now have to go for joint audits if a foreign investor insists on trol of surplus funds
having an international auditor, a move that will
provide a boost to Indian audit entities. The The Securities and Exchange Board of
government's decision is seen as a significant step India (Sebi) is
towards boosting the prospects of local auditing fighting the
firms amid the backdrop of Big 4 audit firms hold- government
ing sway, especially when it comes to companies to retain Rs.
with overseas investment. 1,672 crore
of surplus funds lying with it after the
After extensive deliberations and a report related to audit firms, the govern- Comptroller and Auditor General
ment decided to tweak the auditing requirements for companies with foreign (CAG) flagged the issue in its 2017
investments.
report.
While relaxing the FDI policy recently, the government said there were no pro- According to the CAG, Sebi's surplus
visions on the specification of auditors that can be appointed by Indian compa- funds should be deposited with the
nies receiving foreign investments. Hence, it has been decided to provide in the government in a public account. The
policy that wherever the foreign investor wishes to specify a particular auditor market regulator believes that it is
having international network for the Indian investee company, joint audits should not obliged to do so under the Sebi Act
be carried wherein one of the auditors should not be part of the same network,
and such a transfer will raise questions
an official release had said.
on its autonomy. Sebi raised this issue
in a meeting of the Financial Stability
Tax-free Rs. 20L gratuity to be reality soon and Development Council (FSDC) on
Payment of Gratuity Amendment Bill 2017 is likely to be passed in the forthcom- 29 December, according to two
ing Budget session, which will make formal sector people aware of the matter.
workers eligible for tax free Rs 20 lakh gratuity. At
However, the department of eco-
present formal sector workers with five or more years
nomic affairs (DEA) has decided that
of service are eligible for Rs 10 lakh tax free gratuity these funds need to be deposited in
after leaving job or at time of superannuation.
a public account. The chief control-
"The Payment of Gratuity (Amendment) Bill, 2017 will ler of the accounts and budget divi-
be passed in the Budget session of Parliament, ex- sion is drafting accounting guidelines
pected to begin by the end of this month," a source said. The source further for this account, said one of the two
said, "The government wants to provide tax free gratuity of Rs 20 lakh to people cited earlier, both of whom
organised sector workers at par with Central government". declined to be named.

BANKING FINANCE | FEBRUARY | 2018 | 15

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