The Securities and Exchange Board of India (Sebi) will pay auditors fees for the first year of peer review of accounts of companies in the 50-index Nifty and the 30-index BSE. In an effort to build investor confidence and avoid reoccurrence of Satyam-like frauds, Sebi had announced a peer review of company accounts.
“Sebi will pay peer auditors fees for the first year and then we will review how this exercise will be funded,” Sebi chairman CB Bhave said in Kolkata on Thursday.
Peer review was aimed at covering auditor’s working papers for companies in the National Stock Exchange’s Nifty 50 index and the Bombay Stock Exchange’s benchmark 30-share index.
“If a company pays for a peer review it will raise an issue and there is still a slight element of conflict there. You are actually trying to review the working paper of a statutory auditor and again asking the company to pay,” Bhave said. We have resolved the issue. The peer review report will come to Sebi and we will pay to complete the process, he added.
The process of peer review was scheduled to be completed by end of February. However, reports are awaited. Agreeing that process was behind schedule Bhave said, “There has been a delay in appointing peer reviewer in some cases.”
Meanwhile, the regulator is planning to clamp down heavily on listed companies that announce buyback of shares but sit on it. “The issue has come to our notice and we’ll take a relook at the regulations,” Bhave said.
Sebi is also mulling an opportunity to develop the corporate bond market in a more transparent way before the money is mobilised under the New Pension Scheme.
“The secondary market transactions and settlement processes in corporate debt market still works on a bilateral basis. We need to widen and deepen the corporate bond market. As of now, only a few domestic institutions and Foreign Institutional Investors are participants in this market. We need to broadbase the participants,” Bhave said.