To outsource work; priority on actively-traded, listed companies.
In a bid to avoid accounting frauds of the type that hit Satyam Computers, now called Mahindra Satyam, in January this year, the Ministry of Corporate Affairs (MCA) has decided to scrutinise the account books of all registered companies — listed as well as unlisted — in the country.
The mammoth exercise will be outsourced to chartered accountants, companies and cost and work accountants.
A pilot project will shortly be launched — circulars have been sent to all offices of the Registrar of Companies — and expanded on the basis of the results.
“The priority will be to see that we scrutinise the balance sheets of all listed companies. Though there are around 5,000 listed firms, the actively traded ones will be less than 2,000. So, those companies are going to be the first,” a senior ministry official said.
The official clarified, however, that, “This does not mean unlisted companies will not come under scrutiny if irregularities are found, or complaints are registered against them.”
He added that the eventual goal was to have the balance sheets of all registered companies audited. “It will be an ongoing process,” he said. India has about 900,000 registered companies.
Currently, over 200 officials who are associated with the 20 field offices of the Registrar of Companies conduct a random scrutiny of registered companies.
The ministry officials did not specify the number of professionals that will be empanelled, saying individual field offices have been given the powers to outsource the jobs.
The size of the outsourcing will also depend on the number of fresh annual reports in each regional centre. “Registrations are not evenly spread across the country. Offices in Gujarat, Maharashtra, Kolkata, Delhi and so on are expected to handle heavy loads,” officials said.
Although the exercise will be outsourced, it will be monitored by the government. “The hired professionals will be made accountable for the observations they make,” the ministry official said.
Welcoming the move, Institute of Chartered Accountants of India (ICAI) has asked its members to empanel themselves. Institutions like Institute of Company Secretaries of India and Institute of Cost and Works Accountants of India are also preparing a list of professionals who are willing to be part of the exercise.
The professionals will also help the officials draft or scrutinise official responses to possible irregularities in the account books. Payments will be linked to the size of the company and the complexities of the accounts one handles.
