Guard against window dressing,Pranab tells CAs

As the government battles with several scams including the recent Citibank fraud

As the government battles with several scams including the recent Citibank fraud,finance minister Pranab Mukherjhee today cautioned accounting firms against window dressing and sought stricter disclosure guidelines for financial institutions.

Accountants have a critical role in guarding against window dressing of balance sheets that encourage entities to take more and more risk until they are dangerously leveraged, the minister said while addressing an international conference organised by the Institute of Chartered Accountants of India (ICAI).

He said that greater disclosure standards should be evolved for financial institutions and products. We need to craft credible and consistent rules and regulations for financial markets to prevent a race to the bottom where capital leaks out to the areas with the weakest regulation. We must encourage stronger disclosure standards for systemically important financial institutions as well as complex and sophisticated financial products, he said.

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Lamenting on the occurrence of scams despite laws requiring business entities to keep money trail transparent,Mukherjee said,governments and regulators can lay rules and frameworks,but cannot mandate integrity and ethical conduct.

He stressed that prudential norms should be followed and apparent risk taken should not encourage everyone to take more risks and thereby increase risk for the entire system or at the global level.

As regard economic growth and sustaining it on a long-term basis,the finance minister said though the country is on the path of high growth trajectory,the challenge is to sustain high rate of economic expansion and cross the double-digit growth barrier.

The challenge now is to sustain this high GDP growth over the extended period of time and find the means to cross the double digit growth barrier in the coming years, he said.