To ensure higher accountability and transparency in auditing company books, the government now plans to outsource audit work to professionals such as chartered accountants and company secretaries. At present, it is undertaken by the Registrar of Companies’ offices across various cities.
Partly necessitated by manpower shortage at the RoCs, the Ministry of Corporate Affairs has now cleared a pilot project. The outsourcing, to commence this fiscal, will be undertaken by a panel of chartered accountants, company secretaries and cost and work accountants. The project would be reviewed and if found successful, institutionalised from next fiscal, a ministry official said.
There are around 230 Indian Company Law Officers including RoCs working across the country. But they are able to scrutinise the books of only a few thousand companies and unless they get specific complaints, most companies’ books go without any inspection. There are approximately nine lakh companies registered with the RoCs, of which 9,000 are listed.
The RoCs across the country will constitute panels in consultation with the local chapter of the professional institutes such as ICAI, ICSI and ICWAI, the official said. “Managing so many companies is becoming difficult, because of which RoCs are not able to check the accounts of the companies. Inspection is crucial in the backdrop of happenings at companies such as Satyam,” the official said.
The professionals hired will also help the MCA in examining and analysing the replies submitted by companies in response to letters or notices issued regarding irregularities or violations detected. However, functions like issuing notices, investigations and filing prosecution will remain with the RoC, the official said.
The professionals hired for the job will be paid Rs 2,500 per balance sheet with a paid up capital between Rs 5-50 crore; Rs 5,000 for companies with the a paid up capital of Rs 50-250 crore; Rs 7,500 per balance sheet for companies with a paid up capital of Rs 250-500 crore; and Rs 10,000 per balance sheet for companies having a paid up capital over Rs 500 crore. Apart from this, professionals will have to take an oath of confidentiality, breach of which will make them liable for penal action under IPC, CrPC and other relevant provisions. This practice of outsourcing will be overseen by the Regional Directors of MCA and the ministry will review it on a quarterly basis.