Post-Satyam, firms reviewing fraud control mechanismBy IANS
Friday, January 9, 2009
NEW DELHI - Indian companies have started to review and document their risk management policies and practices to check corporate fraud in the wake of the Rs.70 billion Satyam Computer Services scam, a survey by an industry lobby says.
A quick analysis by the Associated Chambers of Commerce and Industry of India (Assocham) with feedback of over 400 leading corporates, said that to deter possible corporate frauds, companies have commenced re-codifying their risk management policies.
However, about 85 percent of the respondents said although Clause 49 of the market regulator’s Listing Agreement clearly states that the management and the board of directors must accept responsibility for not issuing accurate financial statements, most officials at this level managed to get off the hook even if found guilty.
On the other hand, about 80 percent of respondents argued that putting these programmes and controls in place will help organisations to set the tone of zero-tolerance to fraud and create a mechanism for employees to report wrongdoing to the appropriate authorities.
About 50 percent of corporates said the control systems in vogue are presently geared to detect errors but not fraud and, therefore, there is need for stringent internal control systems to completely plug the scope for corporate frauds.