National Financial Reporting Authority (NFRA) Chairperson Ajay Bhushan Prasad Pandey on Thursday underscored the need for improving corporate governance and aligning Indian auditing with global standards to attract investors.

Observing that there is a need to continue to take cognizance of corporate governance reforms, he said company management, independent directors and audit committee, statutory auditors, shareholders, and regulators constitute five lines of defence to improve corporate governance.

"It is our collective responsibility...We should continue to create trust. Improve the corporate governance, and we should work in that direction," he said, addressing an event organised by industry chamber Assocham here.

Adopting global auditing standards would improve the trust of global investors in the Indian economy, which is on its way to becoming the third largest from the present fifth position, he said.

Making a pitch to align Indian audit practices with the global standards, Pandey said it is in the interest of corporates.

Adopting global audit norms is easier as "we have global precedents", he said.

"We cannot have Indian accounting standards in isolation while not adhering to global standards...Some big corporate failures have been due to related party transactions and subsidiaries siphoning off funds...We must take corrective action like new Standard of Quality Management, changes in the auditing standard SA 600 to reduce the probability of frauds via subsidiaries," he said.

These will lead to early detection of frauds, he said, emphasising that India cannot be a developed economy by 2047 without audit reforms.

He expressed confidence that Indian accountants and CAs can dominate the world with adherence to global standards.