The standing committee on dosclosure and accounting standards of the Securities and Exchange Board of India (SEBI) has prescribed certain professional qualifications for persons to be appointed to the post of chief executive officer (CEO) and chief financial officer (CFO) of companies in order to comply with financial literacy requirements of corporate governance.
The SEBI committee, however, was of the view that it may not be appropriate for SEBI to specify a particular professional qualification for CEO, as the companies prefer CEOs having relevant industry experience, a SEBI release said.
The SEBI committee on disclosures and accounting standards (SCODA) has also suggested rotation of audit firms / partners, continuance of the internal audit system, modification in formats of limited review report and statutory auditor's report and voluntary adoption of international financial reporting standards (IFRS) by listed entities having overseas subsidiaries, among others.
Under "Clause 49 of the Listing Agreement pertaining to 'corporate governance', the CEO and CFO of the listed entity is required to certify that he has reviewed the financial statements and the cash flow statement for the year and that to the best of his knowledge and belief, these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading, SEBI said.
The CEO and CFO are also required to certify that these statements together present a true and fair view of the listed entity's affairs and are in compliance with existing accounting standards, applicable laws and regulations.
However, the present norms do not specify any kind of educational qualification requirements or a certification for the CEO or the CFO, it noted.