Market regulator Securities and Exchange Board of India (Sebi) has finally woken up. In a bid to avoid a Satyam-like financial fraud,Sebi has decided to review the financial statements of all the 50 companies that figure in the NSEs Nifty Index and 30 companies in the BSE Sensex. The review will cover all the top companies in India,including Reliance Industries,Tata Steel,Bharti,ICICI Bank,ONGC and Indian Oil.
Such a review would be in relation to the last quarterly results and audited annual financial results. For this purpose,a panel of auditors would be prepared by Sebi, Sebi said on Friday. This exercise would be taken up following the publication of third quarter results and is expected to be completed by end of February 2009. Some listed companies (on a random basis) outside the list of Nifty 50 and Sensex would also be covered in the exercise,it said.
The review was mooted by the Sebi Committee on Disclosures and Accounting Standards (SCODA) which met in Mumbai today to discuss the course of action required to be taken by the regulatory agencies to boost the investor confidence in the financial disclosures made by listed entities.
After detailed deliberations,the SCODA recommended that a peer review of the working papers (relating to financial statements of listed entities) of auditors would be conducted in respect of the companies constituting the NSE Nifty 50 and the BSE Sensex.
Sebi chairman CB Bhave said the Sebi team would meet former Satyam chairman B Ramalinga Raju on Saturday. “I understand that the Satyam CFO had a conversation with our inspection team today. Our team has also requested Raju for asking him questions in relation to the things that they need to find out. We understand that he would be meeting the team tomorrow,” Bhave told reporters in Mumbai.
Bhave said the Sebi is in touch with the US SEC as Satyam is listed on the New York Stock Exchange and filings have to be made with the US SEC as well. “We are in touch with each other. We have an MoU with the SEC under which we share information with each other if any wrongdoing spans across the two jurisdictions,” Bhave said.
“We have to wait for the documents and the evidence to come. Only then we will decide where the process went wrong,which entity was responsible for the fraud and so on,” Bhave said.