Abnormally-growing firms under ICAI lens | business | Hindustan Times
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Abnormally-growing firms under ICAI lens

ICAI is independently examining the financial results of stock-market listed companies if the revenues and profits of these have grown several times faster than their peers in the industry that they operate. Mahua Venkatesh reports.

business Updated: Apr 07, 2010 22:00 IST
Mahua Venkatesh

The Institute of Chartered Accountants of India (ICAI) is keeping a close watch on companies, especially if the growth rate of any company far exceeds the industry average.

ICAI, the country’s accounting regulator, is independently examining the financial results of stock-market listed companies if the revenues and profits of these have grown several times faster than their peers in the industry that they operate.

“We will keep a close watch on top companies that are listed and may seek further information on their financial results in case we feel there is some discrepancy,” Amarjit Chopra, president, ICAI said.

In 2009-10, the Financial Reporting Review Board (FRRB) under the ICAI picked up as many as 75 companies for further
scrutiny.

The FRRB was set up in 2002 for reviewing financial statements of companies and assess their compliance levels.
At least 150 companies would be taken up for review in this new fiscal, from among the 8,000-odd companies listed on the
stock exchanges.

“The number of companies that have been taken up for further scrutiny in their financial results have increased after the Satyam case came into light,” Chopra said.

Under the present legal and regulatory framework, only auditors are mandated to provide information on a company’s financial results to the ICAI in case the latter asks for it.

In January 2009, corporate India was stunned by the revelations of B Ramalinga Raju, founder of Satyam Computer Services, when he confessed that the company’s books had been doctored for several years.

Companies, however, are not statutorily required to provide information to the ICAI, unless specifically asked for.
Chopra said the focus would be on the top companies listed on the bourses.

The ICAI will also send a report to the Ministry of Corporate Affairs seeking certain legislative changes, which would allow more power and teeth to the regulator.

The report would be sent to the government by May 15.