The Corporate affairs Ministry is planning to outsource the investigation of 7 Lakhs Registered companies’ accounts as the present 20 registrars of companies could not accomplish the work in time bound manner due to under staffing. While considering the outsourcing by the ministry it should not forget to include the claims of SC/ST representation in the outsourcing. The CII has opposing reservation in private sector, but govt outsourcing the work to private, ultimately the representation of the SC/ST in Govt got reduced because of outsourcing, to compensate this the govt should consider for representation of SC/ST in outsourcing by giving preference to the so called specialized chartered accountants firms owned by SC/ST or these firms may be asked to engage the qualified SC/STs in their firms.
The news media like Financial Express which is enjoying the various concession from Govt for enlightening general public about the happening in corporate sector is advocating for corporate companies by conveniently forgetting that the outsourcing plans of govt will be at the cost of SC/STs reservation in Govt Jobs. These Media/ paper neither support the reservation in private sector nor oppose the loss of jobs for SC/ST in Govt sector. This is a sample for intellectual class of India running the news paper by availing various concessions from govt and boasting themselves as fourth pillar of democracy by not bringing the glaring discrimination against 25% SC/ST population in India!
Corporate affairs Ministriy plans outsource to probes into Companie’s books
Corporate affairs minister Salman Khurshid In order to expedite investigations into the books of companies, the ministry of corporate affairs is planning to outsource this job to specialised chartered accountant firms, reports Ronojoy Banerjee in New Delhi. Currently, this work is carried out by the Registrars of Companies.
To expedite investigations into the books of accounts of companies, the ministry of corporate affairs is planning to outsource the investigation related work to specialised chartered accountant firms.
Currently, the job is done by the Registrars of Companies (RoCs) but since it is highly understaffed it is unable to carry out probes in a time-bound manner.
The move to outsource the investigations came up for discussion at a meeting in Hyderabad last week where members of the Parliamentary standing committee on finance met the regional directors and RoCs for a stock taking exercise.“ Outsourcing investigation would guarantee the completion of the probe in a time-bound manner,”
a source who attended the meeting told FE.
An MCA official said the ministry was currently finalizing its views on the matter which would then be forwarded to the Parliamentary standing committee headed by the BJP leader and former finance minister Yashwant Sinha. "No decision has been taken yet. It is at a proposal stage at the moment we need to look deeper into the feasibility part of it," the official said.TheMCAofficial added that once the proposal becomes a law, though the investigation related work would be outsourced, the overall control would continue to remain in the hands of the RoCs.
"Private f firms have developed a sound net work. A model wherein they join hands with he government would be beneficial to both," the source said. Currently, there are about 20 RoCs spread across the country that look into affairs of over 7 lakh registered companies in India.
The RoCs are both the repository of company information as well as preliminary investigation bodies that are authorized to look into company books once directed by the MCA as outlined in thesection234of the Companies Act. In September, the Parliamentary standing committee on finance had recommended that the RoC probe should be conducted in a ‘time-bound’ manner. The PSC also suggested that in a bid to strengthen compliance mechanisms the RoCs should conduct a probe into every company’s accounts at least once a year, which has been opposed fiercely by CII.
The RoCs are both the repository of company information as well as preliminary investigation bodies that are authorized to look into company books once directed by the MCA as outlined in thesection234of the Companies Act. In September, the Parliamentary standing committee on finance had recommended that the RoC probe should be conducted in a ‘time-bound’ manner. The PSC also suggested that in a bid to strengthen compliance mechanisms the RoCs should conduct a probe into every company’s accounts at least once a year, which has been opposed fiercely by CII.
“The standing committee, through its recommendations, has sought to empower investigative agencies to keep a check on erring corporate houses,” a source said. The PSC has also recommended that statutory powers be given to Serious Fraud Investigation Office, an arm of the MCA. Corporate affairs minister SalmanKhurshidhad earlier said that the Companies Bill, 2009 should be tabled in Parliament in the Winter Session.
Source: The Financial Express dt 01.11.2010
Limits to Outsourcing /RoCs can't outsource their governance functionOn the face of things, the corporate affairs ministry's reported plans to begin outsourcing investigation-related work to CA firms seems a good idea--the idea was discussed during a meeting of the parliamentary standing committee in Hyderabad with various regional directors and registrars of companies (RoCs). With 20 RoCs across the country to look into the affairs of 7 lakh registered companies, the task is a mammoth one and there is no way, as the parliamentary committee wanted, the RoC can probe every company's accounts once a year. It is in this context that the move to outsource some basic investigative work into account has been suggested.
But that said, several things need to be kept in mind. For one, if an audit is outsourced as it was in the case of telecom firms, and the name of the company is leaked, this causes its own set of problems--one of these audit firms complained it was being harassed by the company whose accounts it audited. Also, keep in mind that all these firms already have audited accounts--so what's being done is to ask another one of the same tribe to do the same audit again. Surprise checks and cross-checks can be a good idea, though industry would say it puts an unjustified burden on the audited firms, but the onus of making it work is on the corporate affairs ministry you can get temporary policemen on hire, but it the job of the policing agency to make them work according to its standards. In any case, it is useful to keep the old 80:20 rule in mind: 20% of the companies account for 80% of the revenues. So why not concentrate on them? And, most important, when a company has been selected, do the audit fast and make the punishment equally fast--how many companies can you think of that have been caught by the RoCs and had the book really thrown at them? That, more than anything else, will ensure the other firms start behaving themselves.
Source: The Finanacial Express dt 02.11.10
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