The government has decided to hire private professionals to scrutinise companies balance sheets filed with the Registrars of Companies (RoC) in a bid to scale up the annual scrutiny of corporate financial statements and ensure better regulatory compliance.
With the limited staff over-burdened with other work, the government is able to cover only a small fraction of the nearly eight lakh registered companies now. The government is keen to expand its scrutiny of the financial statements filed by companies for early detection of possible violations or fraud.
This key task will now be done by privately engaged chartered accountants, cost accountants and company secretaries. The countrys three statutory regulators for accounting (ICAI), company secretaryship (ICSI) and cost accounting (ICWAI), have already been asked to send a panel of their members to the RoCs for this purpose, said a government official, who wished not to be identified.
The decision to outsource has been taken for the financial year 2009-10. The project, which will be reviewed and its impact assessed at the end of the financial year, may be continued for subsequent years if found satisfactory.
All hired professionals scrutinising the balance sheets, will enter into an agreement with the respective RoC declaring their integrity.
The government will pass on the work only after confirming that the balance sheet, which they are to scrutinise, do not belong to a company which he represents or that of his competitor.
The employed staff will have to take an oath of confidentiality about the financial data that they will be given access to.