Disclosure of audited A/c in six months

Move will increase FII inflow

“It (disclosure of audited accounts twice a year) will instill confidence of the FIIs, increase transparency and also strengthen corporate governance norms,” said Jagannadham Thunuguntla, Equity Head, SMC Capital.

With a view of preventing Satyam-like frauds and disclosing the solvency status of listed companies more frequently, the Sebi Committee on Disclosures and Accounting Standards (SCODA) has suggested that listed companies be mandated to disclose audited statements on half-yearly basis.

“The audited figures of the major heads of balance sheet prepared in accordance with...the Companies Act or its equivalent in other statutes may be disclosed by listed entities on a half-yearly basis,” Sebi said in the discussion paper, on which it invited comments from public by September 25 2009.

Commenting on the proposal, Dholphy D’souza, national leader for IFRS Services, Ernst and Young, said: “It is a very positive proposal. It will make things more transparent. It is good if people come to know more about a company.”

Commenting on the proposal, which will be finalised later by market regulator Sebi, Thunuguntla said that “after Satyam, the regulator has acted in the right direction in making the system more transparent.

“It is a very nice thing that the audited balance sheets will be disclosed twice a year. Currently, the audited accounts are published once a year and for other quarters the unuadited balance sheets are disclosed,” he added.

Besides, disclosure of accounts by listed companies twice a year, Sebi discussion paper suggested rotation of auditing partners every five years.

However, the suggestion that audit firms should be rotated did not find favour with the SCODA which said that “mandatory rotation of firms may not be practical by all companies.”

Commenting on the proposal, D’Souza said that “this is one of the best things they have proposed. If we rotate the partners and not the whole firm, at least there is not a completely new team which is handling the auditing of the company.” There is an extra cost involved if a new team comes for auditing as it has to understand the details of the company’s business.

While rotating a partner would lead to transparency, it would also help the other team members to hand-hold him and get to the depth of the firm’s business, he said. Experts also believe that the SCODA discussion paper has given more responsibilities to the audit committee of the company.