ICAI to set up Risk Management Committee by May

The Institute of Chartered Accountants of India (ICAI) is all set to launch its Risk Management Committee by mid-May, this year.

The committee will work with state governments and corporates in putting up a risk management structure in these entities. The institute has been working in this regard since November, last year.

"Around 70 per cent of the national spending is in the hands of the government through its various departments like defence, education, health etc. There is hardly any risk management structure, or at best, it is at a nascent stage," said Abhijit Bandopadhyay, member of the central council of ICAI.

He also added that the institute was in the process of introducing codes on enterprise resource management and internal audit for both members and non-members.

ICAI had set up a Public Finance Committee(PFC) last year. The PFC offers free consultancy services to different levels of the government including local bodies for analysis of accounts and funds available towards planned and unplanned expenditure.

The Risk Management Committee will also offer free consultancy to the government. ICAI sources said that the PFC was set up with a specific purpose to ensure that there was proper utilisation of government funds towards a more inclusive growth in the country. It has worked with the Kerala government and is working on assignments from Meghalaya and Gujarat governments now. Experts here felt that poor risk management practices could be largely blamed for the credit crisis and the ensuing financial meltdown. Some said that the risk previously was simply reported, rather than managed. ICAI's parent body, the ministry of corporate affairs, has urged the institute to work on risk management practices. “We are already in talks with state governments as well as industry and are getting a positive response,” Bandopadhyay said.

If all goes well, then ICAI can offer a separate course on risk management to chartered accountancy students or CA pass-outs in order to create a talent pool that will serve the corporates and the government in identifying and mitigating risk.

Roopen Roy, managing director, Deloitte India,however,felt that enterprise risk management had actually become obsolete in today's context.

"Risk is now beyond and outside the enterprise.In the current conditions it is important that regulators across the globe orchestrated their efforts so that such a situation can be avoided in the future," Roy told Business Standard.