The Hindu : Business : Auditing to be made mandatory for exchanges and depositories

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Auditing to be made mandatory for exchanges and depositories

Special Correspondent

Committee to be set up to examine ways to prevent corporate frauds

NEW DELHI: The Securities and Exchange Board of India (SEBI) has decided to make it mandatory for stock exchanges and depositories to annually audit their transactions as per new code of conduct evolved by the market regulator.

Revealing this at the Assocham organised conference on State of corporate fraud control in India here on Friday, SEBI’s whole-time Member, T. C. Nair, said that the decision would be communicated to stakeholders concerned in the next few days or at the most within a month.

He also hinted that it could also set up a committee of experts drawn from the IT and communications field to examine ways to prevent corporate frauds with skills acquired through information and communication technologies.

The market regulator was also examining the cases of misleading corporate announcements, including exaggerated financial performances of corporates, he said.

Cases of exaggerated IPOs were also being looked into from all possible ethical practices and those corporates that were found guilty for insider trading would be dealt with strict provisions of the law and other statutes, he added.

He emphasised the need for adopting firm corporate governance norms as with these norms in place, the possibilities of corporate frauds would minimise to a large extent.

Speaking on the occasion, S. D. Samant, Joint Director, SFIO, Ministry of Corporate Affairs, said that SFIO was closely interacting with the Department of Company Affairs, detective agencies, police forces and intelligence bureau in order to expose cases of corporates.

Relaxation

Providing a major relief to big corporates, market regulator SEBI on Friday proposed to increase the time period for submitting consolidated financial statements to stock exchanges at the end of each quarter.

“It is proposed that the existing timeline (within one month at the end of each quarter) may be extended to two months for those companies, which opt to submit to stock exchanges the consolidated financial results in addition to standalone financial results,” SEBI said while seeking comments on the same by July 26.

The regulator had received various comments on Clause 41 of the listing agreement relating to financial statements. It found that there were practical problems faced by companies having global operations in submitting consolidated financial statements and preferred longer duration to do so.

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