The Comptroller and Auditor General (CAG) on Friday asked the industry to do some “soul searching” and improve business practices.
“Business practices of some corporate houses have become the subject of increasing public scrutiny for their perceived ethical deficit. Corporate India needs to go through a phase of reflection and soul searching,” Comptroller and Auditor General of India Vinod Rai said at the annual session of the Confederation of Indian Industry (CII) here.
Rai said there was pressure to provide transparent and accountable governance and address concerns relating to accurate and fair accounting, fair practices and socially responsible behaviour.
“A sound policy on corporate governance, business ethics and corporate social responsibility to regain public trust and overcome the environment of negativity has become a necessity,” he said. Corporate culture must be in consonance with the best practices relating to transparency, accountability and good governance.
“The quality of financial reporting adopted by the companies needs to be substantially improved. Companies should follow high disclosure standards. The risk factors and off balance sheet items affecting company’s performance should be adequately disclosed,” the CAG said, adding his support for provision of independent directors.
"Companies need to integrate ethics into corporate culture. They need to embrace a stringent code of conduct and standards of business. Appropriate policies and procedures have to be devised and enforced to help eliminate unacceptable behaviour and work habits," he said.
“This is important to build trust and confidence,” Rai said.
Rai underlined the importance of independent directors capable of serving in the best interests of stakeholders.
“Appointment of truly independent directors will strengthen supervision and tone up the quality of board deliberations and performance. Steps have to be taken to avoid major conflicts of interest in areas such as auditor’s independence and strengthening audit committee to ensure healthy oversight,” Rai said.
Chief election commissioner (CEC) SY Quraishi said elections to be the biggest source of corruption, as the politicians submit false affidavit, bogus expenditure statement and contest elections despite having a criminal background.