THE statement of the chairman, Securities and Exchange Commission of Pakistan (SECP), that he intends to form a panel of 20 to 25 CA firms to conduct the audit of NBFIs, insurance companies, listed companies and private companies a having capital of more than Rs7.5 million is unjustifiable and tantamount to closing of more than 400 audit which have been licensed by the Institute of Chartered Accountants of Pakistan to act as statutory auditors.

The chartered accountants have developed their professional practices as auditors as well as their cliental base by their sheer hard work stretched over a long period. The cartelisation tendency will ruin their professional practices altogether.

On the one hand, the government has constituted a competition commission of Pakistan to protect competition and facilitate business growth in the country and, on the other hand, the SECP wants to create the audit cartels to promote the vested interests.

Nowhere in the developed world or in the neighbouring countries, the regulators have built such types of audit cartels to hamper the growth of any profession.

This move will not only block the young and energetic professionals of accountancy from starting the professional practices independently but will also result in snatching the business of the present audit firms, thereby enriching the already rich audit cartels.

The role of the SECP as a regulator will also infringe upon the rights of the shareholders who under the various statutes are provided to choose the auditors of their own choice.

If the SECP is interested in improving the quality of standards, it should, instead of creating audit cartels, enforce the mechanism to check whether the financial statements prepared by the management of companies and audited by the statutory auditors are in accordance with the disclosure requirements of ISAs/IFRS notified as regulator.

The ICAP must not coalesce with the SECP in this scheme of closing the business of small and medium-sized audit firms.

ZAFAR IQBAL

Lahore