Training to officials to check corporate frauds
The Ministry of Corporate Affairs has established Indian Institute of Corporate Affairs (IICA) to act as the capacity building support for the officers / officials of the Ministry on issues relating to effective corporate functioning and regulation. The Institute can also design and deliver training programmes on such areas relating to corporate laws and regulations on specific requests from concerned Ministry / Department / Organisation. Giving this information in the Rajya Sabha, Shri Salman Khurshid, Minister of Corporate Affairs, said in a written reply that an elaborate regulatory framework is in place to deal with cases like Satyam scam.
This framework provides for statutory disclosures about the affairs of companies intended to inform the stakeholder the truth about the state of affairs of companies. To facilitate making of such disclosures by companies, and for stakeholders and regulatory agencies to easily access and view them, Government has set up an electronic registry with round the clock access through internet. The Government has powers of inspection of the books of accounts of companies and also to investigate their affairs, if need be, under the Companies Act, 1956.
Shri Khurshid informed the Rajya Sabha that the Government has set up Serious Fraud Investigation Office (SFIO), which is a multi-disciplinary body, to investigate multi-dimensional frauds of complex nature. The Companies Act also provides for appointment of independent, statutory auditors to audit the accounts and report to the shareholders. Such audited accounts are also displayed on the electronic registry for general viewing. While the reporting requirements are regulated under the Companies Act, 1956, the conduct of auditors is regulated under the Chartered Accountants Act, 1949. In addition, for listed companies, compliance with these statutory requirements is required to be certified by a company secretary in practice, who in turn is regulated under the Company Secretaries Act, 1980. Government has amended the Chartered Accountants Act, 1949 and the Company Secretaries Act, 1980 in 2006 to provide for a more effective disciplinary mechanism to deal with cases of misconduct by Chartered Accountants, Company Secretaries respectively. In 2006, the Government has notified Accounting Standards to enable accounts of companies to be drawn up and disclosed on the basis of fair, transparent and internationally accepted principles.
The Government has also introduced Companies Bill, 2009 in Lok Sabha on 3rd August, 2009 which seeks to make more stringent provisions in case of frauds by companies, their directors and auditors etc.