SEBI to closely review all the companies on the index
10 January 2009
In order to maintain the credibility of corporate India and avoid the recurrence of another situation like Satyam, the stock market regulator has decided to microscopically review the third quarter earnings of the companies on the Sensex and Nifty besides some other random companies.
During this period, many analysts have alleged that cooking of books to show inflated figures was hardly unusual in India and abroad. This move by SEBI may just open a can of worms with some surprises crawling out.
In a press release SEBI said, ''In the light of recent developments with respect to Satyam Computer Services Ltd., the SEBI Committee on Disclosures and Accounting Standards (SCODA) met today in Mumbai 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.
In this context, 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. Such a review would be in relation to the last quarterly results and the last audited annual financial results. For this purpose, a panel of auditors would be prepared by SEBI. This exercise would be taken up following the publication of 3rd quarter results and is expected to be completed by end of February 2009.''
SEBI has accepted this suggestion. Some listed companies (on a random basis) outside the list of Nifty 50 and Sensex would also be covered in the exercise.