As a consequence of the auditor rotation program, new auditors are independently assessing the information provided by the management of companies. Information previously compiled and provided may not be satisfactory for the new auditors, and as a result, they may choose to withdraw from the audit.

Auditors may also be taking a harder look and directing more questions at companies that are financially stressed. The introduction of The Insolvency and Bankruptcy Code (IBC) enables an independent search for undervalued transactions, preferences and other avoidance actions. Any significant undervalued transfer of assets or other avoidance transaction or fraud may have a big impact on the numbers and disclosures in the audited financial statements. Auditors, therefore, may be reluctant to sign off on financial statements where the information or explanations from the management are not deemed satisfactory.

In western-developed markets such as the United States, financial losses from non-compliance or bad practices are severe. Such losses may include large fines and penalties by regulators or class action law suits by stakeholders. Strong regulatory enforcement and financial penalties in India can be a huge deterrent for non-compliance and bad behavior.