04 July 2010
May I get your help concerning the aftermath of receiving qualified auditor opinions for Indian listed companies? In another word, what would be the negative outcomes of receiving qualified opinions for these listed companies?
Or what would be the penalties for these listed banks that received qualified opinions, for example, would they be suspended of being listed for a given period of time? Or these companies might be charged a specific of money by the authorities?
Or there are no specifically regulatory penalties, but these listed companies would suffer a lot from the stock market as the public confidence upon their financial condition is weakened greatly along with the issuance of qualified opinion?
I appreciate so cordially for your talent and help.
05 July 2010
1. The last point narrated about would be seen first i.e. stock prices will immediately go down. A practical example; in the year 2000 each and every company was required to report whether thier computers have complied with Y2K provisions.
In one of the company -
Sukhjit Startch
- the prices were quoted around 150 before the publication of results and thenafter simultaneously came down to Rs.60 despite disclosing good results.
When I referred the Balance Sheet of the company I noted a surprise remark :
"The provisions of Y2K is not applicable to the company because books are maintained manually."
Although there was not negative audit remark according to the circumstances disclosed by the company still it was wonderful to note that a listed company was not having computers at all.
The penalties and likely action on the company and its directors would depend upon the circumstances of the case.
05 July 2010
Each and every Statutory Act has penalty provisions within it.
If someone does not follow required compliance under the relevant Act, penalty is lodged. See Income-Tax Penalty Provisions Chapter, Comapny Law Penalty Provisions etc...For ready reference; take help of ready reckoner.
CAclubindia
