Ministry of corporate affairs Plans to outsource investigation related work to specialised chartered accountant firms
To expedite investigations into the books of accounts of companies, the ministry of corporate affairs is planning to outsource the investigation related work to specialised chartered accountant firms.Currently, the job is done by the Registrars of Companies (RoCs) but since it is highly understaffed it is unable to carry out probes in a time-bound manner.
The move to outsource the investigations came up for discussion at a meeting in Hyderabad last week where members of the Parliamentary standing committee on finance met the regional directors and RoCs for a stock taking exercise. “Outsourcing investigation would guarantee the completion of the probe in a time-bound manner,” a source who attended the meeting told FE.
An MCA official said the ministry was currently finalising its views on the matter which would then be forwarded to the Parliamentary standing committee headed by the BJP leader and former finance minister Yashwant Sinha. “No decision has been taken yet. It is at a proposal stage at the moment we need to look deeper into the feasibility part of it,” the official said.The MCA official added that once the proposal becomes a law, though the investigation related work would be outsourced, the overall control would continue to remain in the hands of the RoCs.
“Private firms have developed a sound network. A model wherein they join hands with the government would be beneficial to both,” the source said. Currently, there are about 20 RoCs spread across the country that look into affairs of over 7 lakh registered companies in India. The RoCs are both the repositiory of company information as well as preliminary investigation bodies that are authorised to look into company books once directed by the MCA as outlined in the section 234 of the Companies Act. In September, the Parliamentary standing committee on finance had recommended that the RoC probe should be conducted in a ‘time-bound’ manner. The PSC also suggested that in a bid to strengthen compliance mechanisms the RoCs should conduct a probe into every company’s accounts at least once a year, which has been opposed fiercely by CII.
“The standing committee, through its recommendations, has sought to empower investigative agencies to keep a check on erring corporate houses,” a source said. The PSC has also recommended that statutory powers be given to Serious Fraud Investigation Office, an arm of the MCA. Corporate affairs minister Salman Khurshid had earlier said that the Companies Bill2009 should be tabled in Parliament in the Winter Session.