The proposed agency would also examine accounting frauds of certain classes of listed companies or those of Rs 500 crore turnover or more.
Corporate account frauds will soon come under the scanner of a specialised investigative agency to be set up by the government soon, according to an Economic Times report. The specialised agency will have a robust mechanism for faster inquiries into scams corporate account scams.
The proposed agency would look into scams such as the one by Satyam Computer Services, which overstated earnings for several years under a previous management said the report. It would also examine accounting frauds of certain classes of listed companies or those of Rs 500 crore or more.
The agency would be formed under the Companies Act provisions said the report. Apart from this, it will be mandated to investigate auditing and accounting frauds, either on its own or on the referral by the centre.
According to the report, the threshold for accounting frauds by the new agency might be Rs 500 crore and above, certain listed companies.
The agency was first proposed after the Satyam scam broke out and had even the auditors implicated in the scam. The agency will have an overall role to regulate chartered accountants as well as set standards said the report. Forensic auditors will also be present on its panel.
The Institute of Chartered Accountants of India (ICAI) currently has the authority to investigate and take action in such cases in which the auditor is involved. The ICAI can also investigate any fraud below the government threshold set.
The report said that the ICAI has requested the corporate affairs ministry to not dilute its authority. It in fact has made suggestions to the government that the new agency look at high-value accounting scams above the threshold of Rs 1,000 crore.
ICAI, President, Manoj Fadnis in the report said, “We have made a representation to the government that ICAI's mandate should not be diluted and authority to initiate probe and take disciplinary action against auditors should rest with the institute.”
The proposed agency will also be in charge of setting up and revising accounting standards. It will also have top industry professionals and several government bodies on its panel.
“The agency will make recommendations on formulation and laying down of accounting and auditing standards for companies,” said the senior government official in the report. He further added, “It will also monitor and enforce compliance and oversee quality of service of professionals in the industry.”
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