The government today said it has asked the Registrar of Companies (RoC) to look into accounts of some companies on the basis of alerts put out by an early warning system, which has been installed to check corporate frauds.
The Ministry of Corporate Affairs (MCA) in September had developed an early warning system (EWS) to detect corporate frauds. The software-based fraud detecting system scans firms based on 10 financial parameters set by the ministry.
“To start with certain companies have been identified. The Registrar of Companies concerned have been advised to carry out technical scrutiny of documents filed by these companies to check any irregularity,” Corporate Affairs Minister Salman Khurshid informed Parliament today.
The Ministry is also looking at fine-tuning the new Companies Bill, which is pending in Parliament, to firmly deal with financial frauds.
“Identification of companies through the EWS is a continuous process… This system is applicable to all types of companies,” Khurshid said.
On the effectiveness of the system to prevent a Satyam- like fraud which went on undetected for years, Khurshid had earlier said, “Essentially I put it like a medical test … lipid profile test to tell if your lipid profile is going wrong so that we step in immediately.”
The objective of the EWS would be to develop a permanent system for scanning everybody, he said.
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Did you know that public companies are expected to have independent directors.
But the independent directors are selected by the people who have controlling rights in the same company.
Why dont they have a panel of qualified directors, and the independent directors should remain for fixed terms, so as to ensure independence.
The true state of affairs in the ROCs are not in the knowledge of the Hon’ble (and plainly honest) Minister for Corporate Affairs. These are indeed the breeding and nurtiring grounds of corruption-right from the top to the receipt counters. There are CAs who loiter in the corridoors of the Ministry, CLB, ROCs, etc., and with the complicity of the top bureaucrats, forcibly obtain the audits of companies and then force many of their clients to indulge in fraud. So, for whom is this EWS really meant?
The most innocent and the cleanest are to be harassed as usual by the officials-EWS or no EWS. Otherwise, what were the officials (other than the generalist IAS) doing all these years of the rise and fall Satyam/IPL, etc.?