Watchdog regime necessary to protect investors: Moily

The Government today told India Inc that a "watchdog regime" was necessary to protect investors from financial frauds and irregularities.

"We do realise that our pro-active role to improve quality of corporate governance does, at times, cause some misgivings in the corporate world, there is no doubt that we require a watch-dog regime without affecting flexibility, autonomy and enterprise...

"...it is constant endeavour to keep this equilibrium," Corporate Affairs Minister Veerappa Moily said at an Assocham event here. He said it was the responsibility of the MCA to protect the interest of millions of investors from "losses arising out of financial frauds and related business irregularities including mis-governance".

Moily added that corporate growth was not just about increasing turnovers anymore, but is much wider and includes corporate social responsibility, corporate governance and corporate sustainability.

"Good governance reflects the way companies address legal responsibilities and therefore, provides the foundation upon which CSR and corporate sustainability practices can be built to enhance responsible operations," he said.

He also said that there was a need for institutional reforms and capacity building in financial management system at all levels of government.

"The purposes," he said, "is not only to ensure high quality of accounting and financial reporting but also monitoring flow of funds in various governmental programmes/and projects.

Moily further said that in order to ensure transparency and accountability, the MCA has mandated XBRL-based filing of financial statements.

XBRL is a globally accepted standardised business reporting tool that enables easy dissection of bulk documents without delay.

"This (XBRL implementation) resulted in a dramatic decline in compliance costs to companies as well as improved compliance by them," he said.

He added that the Ministry was working on improving XBRL filings and has invited comments from stakeholders regarding various aspects.