Sorabh Gupta (Manager ( Taxation )) 18 September 2009
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.
santhosh (CA) 18 September 2009
The New Companies Act Bill which will become an act sooner also proposes such a Provision.That is Every Company must have Qualified Chartered Accountant as CFO of the Company!. This will create very good employment oppurtunities for CA's in Industry.
ACMA-ICAI (DGM-Global Voice Business) 18 September 2009
This was misleading news. after that SEBI Commitee, SCODA has rejected the proposal.
LISTED FIRMS CFO NEED NOT BE A CA: SEBI Commitee
The market regulator’s committee, in a discussion paper on Monday, recommended changes in the way companies disclose earnings and sought placing greater responsibilities on internal audit committees and firms to ensure compliance with accounting norms.
The implementation of these proposals would require companies to make more efforts to stay listed on the stock exchanges, auditors and lawyers said.
The Sebi committee indicated that the chief financial officer of a listed entity need not be a chartered accountant, but proposed that the appointment should be approved by its audit committee. It said the audit committee, which comprises two thirds of an entity’s independent directors, will be responsible to ensure the top finance officer’s professional credentials.
RS Loona, managing partner of Alliance Corporate Lawyers and former executive director (law) at Sebi, feels the appointment of a chief finance officer should be done by a company’s board, rather than the audit committee.
“The role of the audit committee should be only to the extent of expressing its opinion about the appointment,” Loona said.
The Committee, however, recommended the Sebi’s proposal to make it mandatory that an external audit firm would carry out the internal auditor’s role, “would not be prudent”.
Further, the Sebi committee proposed making disclosure of audited figures on the balance sheet every six months. Currently, companies disclose their statements of assets and liabilities at the end of every financial year. The step will enable investors gain a better perspective about a company’s asset-liability position more frequently.
The committee has recommended to streamline the submission of financial results by companies and reduce the period for their submission to the stock exchanges.
“There is still a need to try and standardise the extent and quality of reporting by various companies; some report audited, some reviewed and some unaudited and unreviewed results which may either be standalone or consolidated,” said V Venkataramanan, Director, accounting advisory services, KPMG. “Introducing a more consistent and comparable format for quarterly reporting should be the medium term aim for listed companies in India,” he said.
While proposing that the audit committee should be responsible for the independence of the audit firm and its partners, the committee also proposed rotating an audit firm’s partner, who signs the audited statements, every five years.
“The objective behind the above recommendation seeks to ensure that the statutory auditors are independent from management. It would also break any continued long-term association of an audit partner with the management of a particular listed entity,” the discussion paper said.
The committee has recommended relieving the auditors of the responsibility of verifying the details regarding disclosure of pledged shares of the company promoters.
Finally, the Sebi committee proposed that companies should be allowed to voluntarily adopt International Financial Reporting Standards as a possible first step towards phased implementation of the new accounting practice starting April, 2011.
“Voluntary adoption of IFRS will allow large companies to be truly comparable with their global peers. The current proposals should be supplemented with a clear road map for when mandatory IFRS adoption will be required for listed companies in India,” Venkataramanan said.
R.Veeraraghavan (CMA) 18 September 2009
|Originally posted by :Sorabh Gupta|
There is again a difference between a chartered accounting function which is a public accounting domain,and a Management Accounting domain which is done by professional accountants in business or Management Accountants in India qualified Management accountants are members of ICWAI..