Corporate Governance in India
Corporate governance in India is what you read in the law syllabus of
Apex accounting bodies in India.
Corporate governance in India is what you see on the glossy paper used for audit report
of most Indian companies.
Corporate governance in India is above board without the underlying true spirit.
The various parties entrusted with the job of ensuring compliance with corporate governance have vested interest directly of indirectly, this is not obvious to the public eye.
Independence of auditors is another aspect which requires consideration. The proposal in Companies Bill 2008 to prevent company auditors from offering consultancy and advisory services is a right step in this direction. This assumes greater significance where companies may hire consultancy services from their statutory auditors who may turn a blind eye to discrepancies in financial statements.
Next important aspect is the technical competence of company auditors to detect the complex frauds committed by top management. Cleverly laid down frauds go undetected by company auditors due to limitations of audit.
The rat race amongst major multinational companies to complete an audit and disclose financials within a short span of 7 days from year end date or within 15 days from year end date is another factor contributing to this chaos.
By conducting audit for the sole purpose of audit documentation auditors give a helping hand to the management to conduct more such frauds.
Under the garb of “an auditor is not a blood-hound but a mere watch dog” even basic audit procedures are compromised.
Satyam should be an abject lesson to other corporate bodies to restrain themselves from unethical corporate governance and accounting practices else there is a disaster waiting to happen.
Satyam is an acid test to the auditing procedures adopted by the big four accounting. Accounting bodies in India need to realize that an ounce of prevention is worth a pound of cure.
CAclubindia
