ICAI zeroes in on 10 cos for financial discrepancies
April, 08th 2010
Almost a year after the Satyam scandal, accounting regulator ICAI has zeroed in on around 10 big-listed companies for discrepancies in financial reporting and has ordered investigation into the conduct of the auditors. The regulator has also alerted the government and market regulator Sebi on the matter.
The Institute of Chartered Accountants of India (ICAI), that regulates the accounting and auditing processes in the country, is looking into the role of the auditors and whether they were lax in carrying out their duties.
Sources said the ICAI has already asked its displinary committee to look into the matter and submit its findings. Those flagged are "among the 10 companies traded on the BSE and NSE", sources said, adding that these were being probed after discrepancies were found in their financial reporting.
The sources said that the suspect companies were identified by ICAI's Financial Reporting Review Board (FRRB), a body that is empowered to suo motu look into the published accounts of various top companies. The FRRB, that had picked up a total of 75 companies last fiscal, normally zeroes in on them after it suspects some kind of discrepancies and abnormalities in their reporting.
"For example, it can pick up a company if it feels that its growth rates are abnormally higher than that of its other industry peers or its profits look unreal," the sources said.
After its own preliminary probe, the FRRB referred around 10 companies to the disciplinary committee, that will now carry a detailed probe into their accounts. The investigation though will be based more from the point of view of the role of the auditors and whether they had carried out their work properly or not.
The ICAI, however, does not have the authority to summon officials of erring companies and seek explanations from them. Sources said the accounting and auditing regulator has now petitioned the government for more powers to carry a detailed probe, which would include the authority to seek answers from suspect companies.
The sources said the ICAI is planning to go on an overdrive with its efforts to track such companies and the FRRB is likely to look into the accounts of around 150 top companies this fiscal to see any discrepancies.