Indian corporate needs Public Company Accounting Oversight Board

In United States to protect the interests of investors, Stock Exchange Commission (SEC) has mandated that all Certified Public Accountants (CPA) should register with Public Company Accounting Oversight Board               ( PCAOB) as per Sarbanes-Oxley Act of 2002 (SOX) if they wish to audit of public companies. PCAOB oversee the audit of public companies that are subject to the securities laws, establish audit report standards and rules, investigate, inspect and enforce compliance relating to registered public accounting firms, associated persons, and the obligations and liabilities of accountants.

Securities Exchange Board of India (SEBI) also should follow US Stock Exchange Commission and setup similar board to oversee the audit of public companies in India so that frauds like of Satyam Computers can be minimised

Corporate Governance Watch 2010

Corporate governance standards have improved over the past decade, but

even the best Asian markets remain far from international best practice.

Regulators make it too easy for companies to get away with box-ticking.

Markets still lack effective rules on fundamentals such as independent

directors and audit committees. Not enough has been invested to make best

practices work. Meanwhile, most institutional investors are yet to invest

sufficiently in voting, engagement or stewardship. Rather than use the global

financial crisis as a platform to push reform forward, governments have taken

a complacent view, happy that the crisis this time did not start in Asia

Phil Armstrong at 10 th ICSI National Award for Excellence in Corporate Governance

Crises such as Satyam compromise India’s promising and enduring economic outlook. Because it

exposes fundamental areas of concern that are important to foreign investors and capital markets.

Issues such as: 3

• the relationship between controlling and minority shareholders particularly in family owned

or controlled companies

• related party transactions and its proper regulation

• quality of financial disclosure

• the role of promoters

• independent oversight of the Indian accounting profession

• limited activism of domestic institutional investors, and

• issues of director independence and board effectiveness.