How the Indian Government/Regulators are creatively using checklists

Auditors have known the importance of checklists for long. Indeed, the audit programs are nothing but formalized and modified time tested checklists. But while auditors are trained to avoid the checklist 'tickbox mentality' and to 'think beyond the checklist', the same has not yet penetrated the compliance mindset. There are a plethora of laws/regulations/rules which need checklists. A few are listed below

• Corporate governance compliance checklist to be filed by listed companies with the stock exchange under Clause 49 of the listing agreement
• CARO 2003 checklist to be attached to the audit report, under the Companies Act 1956
• Due diligence checklist to be filled by the merchant banker and mentioned in prospectus
• Compliance calendar and checklists used for routine compliance purpose
• Due diligence checklists used during M&A, to ensure that no liability is missed out
• Pre-filing validation for e-forms/tax returns/TDS returns to ensure that the mandatory requirements are satisfied, and that wrong data/inappropriate numbers are not filed. This is indirectly using the same checklist manifesto. .

 However, all these checklists are dstatutorily mandated. There is tremondous scope for using checklists even for non routine work, to ensure that nothing is missed out. While this may implictly be done during audit planning, it would not hurt to have an output checklist to service as a work guide AND a milestone reference. As Atul Gawande's seminal book 'The Checklist Manifesto' apttly puts it, even highly skilled professionals may commit mistakes unknowingly out of habit, unless they internalize a checklist and bother to update it often. In case of CAs, professional judgement instances such as client acceptance, audit qualification, degree of audit evidence/sampling etc are all cases where a checklist would be very useful to ensure internal consistency. Other innovative ways to use checklists are

• Tickoff legal agreement clauses against desirable elements, to check for contract completeness and unusual terms. For example, an outlicensing agreement without audit rights, IPR reversion at end of term etc, is unusual to say the least, and may signal legal risk later on. This is done when approving VGF requests. This practice should be more widely followed.
• Using cross checks in tax returns check/PDS eligibility determination etc.