The Ministry of Corporate Affairs, which has initiated investigations into the accounts of as many as six public sector undertakings apart from the private sector Educomp Solutions Ltd, is not likely to apply the brakes anytime soon.
The government plans to pick up firms at random from companies that show any kind of discrepancy in their auditors’ report or variations in the accounting standards and investigate them further, a highly-placed government official, who asked not to be identified, told Hindustan Times.
The probe is expected to bolster greater transparency and accountability in corporate governance, and also raise the level of credibility of both public and private sector companies, the official said, without divulging company names.
“The government could also look out for any crucial information pertaining to any company apart from studying the auditors’ reports to pick on a few for investigation,” said Dushyant Tyagi, member, Quality Review Board, a body set up under the ministry to look into auditing norms.
Corporate India feels that the move would benefit the image of Indian companies by highlighting that the Satyam Computer Service fraud involving falsification of accounts was only an isolated case.
“Transparency and corporate governance norms are very critical and would raise the prestige of the Indian corporates,” Amit Mitra, secretary- general of industry chamber Ficci told Hindustan Times.
Mitra added that if the companies have not doctored their books they should have no problems with investigations.
Manoj Kumar managing partner at law firm Hammurabi and Solomon said that the government has always been reactive but there was a need to take the initiative to clean up India’s corporate culture.