The government is set to fast track the process of updating and finalising accounts of public sector units in order to get a correct picture of their financial health before it decides a roadmap for them.
The department of public enterprises is considering a proposal to reduce the period of audit pendency for public sector undertakings (PSUs) to seven years, before their accounts are taken up for an finalisation.
The move assumes significance in the wake of several public sector units primarily at the state level having a lax approach towards finalising their accounts, some of which are pending for over two decades.
As on September 2009, 14 central PSUs had their accounts in arrears for periods ranging from 2 to 13 years and over 600 operational state PSUs whose accounts are in arrears for periods ranging from 1 to 25 years.
The rational cut-off of the pendency period will give the government an opportunity to formulate a proper strategy to fix a time limit within which the accounts of the firms could be updated, said a senior government official on conditions of anonymity.
The proposal was discussed at a recent meeting of the department of public enterprises, Comptroller and Auditor General of India (CAG), ministry of corporate affairs and the Institute of Chartered Accountants of India (ICAI).
The meeting thought it best that the pendency gap be reduced and appropriate guidance be prepared to audit the PSU accounts to the latest financial year.
While the proposal is at a nascent stage, the ICAI which is the apex body of auditors in the country has been asked to prepare a guidance format that will be required to bring down the pending period audit and update them to the latest date.
It is a matter of concern that so many PSUs take critical financial decisions in the absence of required financial information, said Amarjit Chopra, ICAI president. He said that the accounts-in-arrears beyond a certain period, for example seven years, would not be considered, which will then be adjusted through appropriate guidance for the auditors.