India Inc's reporting standards under ICAI scanner
July, 27th 2012
India's accounting regulator will look into the standards being followed by some of the country's leading companies, a move that comes in the wake of serious concerns raised by several analyst firms.
Global analyst firm Veritas had downgraded Reliance Communications over corporate governance and accounting norms a few weeks ago, just as it had earlier done in the case of Kingfisher, Reliance Industries and DLF, among other companies, over discrepancies in their financial reports.
"We have been keeping tabs on these reports and have decided to look into the matter seriously as such reports tend to have huge implications on market sentiments," said Jaipdeep Shah, president of Institute of Chartered Accountants of India, which is responsible for regulating accounting and financial reporting practices in the country.
Shah said the Financial Reporting Review Board will deliberate on the matter of reporting standards being adopted by the corporate sector and thereafter the ICAI will take up the issue with the corporate affairs ministry.
The board, constituted in 2002 by ICAI, seeks to periodically review financial statements of enterprises to ensure compliance with the disclosure and accounting requirements prescribed by the regulatory bodies as well as the auditors.
Over the past one year, several reports have questioned the corporate practices of Indian companies. In June, transnational brokerage firm Macquarie downgraded the rating of India's largest home loan company, HDFC, accusing it of inflating earnings and inadequate disclosures. India's top biotech firm, Biocon, was similarly downgraded in May by Espirito Santo.