Build greater trust in financial statements, FM Nirmala Sitharaman tells accountants

Union Finance Minister Nirmala Sitharaman. File
| Photo Credit: PTI

Finance and Corporate Affairs Minister Nirmala Sitharaman on November 18, 2022 urged accountants to ensure they adhere to fair and transparent practices and remain independent in their functioning in order to engender trust in the integrity of financial statements that they vet.  

Terming accounts that ensure ‘transparency, clarity and accountability in a company’s financial affairs’ a ‘fundamental requisite’ for corporate governance, the minister emphasised that accountants’ responsibility is not just limited to shareholders in the businesses they work for.

“…Statutory filings and audit reports are public documents and they are relied on by various stakeholders, including financial institutions, governments, and common retail investors,” Ms. Sitharaman said in a keynote address to the World Congress of Accountants being held in Mumbai. This is the first time India has played host to the Congress that has been convened since 1904.

Suggesting that accounting business leaders should look at how to build trust among stakeholders, Ms. Sitharaman said that ethical and diligent conduct by the accounting profession can benefit multiple stakeholders.

Welcoming the formation of a new International Sustainability Standards Board by the International Financial Reporting Standards (IFRS) Foundation to converge towards a single set of global reporting norms, the minister linked sustainability norms for environment and other socio-economic factors to ‘people, planet and profits’.  

Ms. Sitharaman also asserted that the world is going through a ‘complete reset’ and is ‘in a state of flux because there are so many challenges that have never been seen before, India seems to be an ‘island of stability with policy consistency, a stable government’ and is growing at ‘a very good, fast rate’.

She also suggested the accounting fraternity must examine how new technologies such as blockchain, Artificial Intelligence, data analytics and cloud computing will make a ‘difference’ to how financial information is gathered, processed and reported.   

“All of this is going to give us the advantage and machine learning is also going to assist us and to improvise the accounting process itself and therefore, meaningful generation of information to aid decision-making is going to be so much more machine driven. Good analytics and discussion on these points would help us find unprecedented opportunities for data analytics to provide us the solutions for some of the issues which dominate, of transparency or accountability itself,” she concluded.