| Many listed firms had same auditors for over 10 yrs: IIAS |
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Mumbai, 23 October Proxy advisory body Institutional Investor Advisory Services India ( IIAS) has called for periodic rotation of auditors and capping their tenure at 10 years. "IIAS expects the tenure of the audit firm to be capped at 10 years. It would recommend voting against the reappointment of vintage auditors." An auditors tenure of over 10 consecutive years blemishes the objectivity of the audit process and the independence of the auditor, it said. It said 25 of Nifty- 50 companies and 17 of 30- share Sensex companies had the same auditors for more than 10 years. Two had rotated their auditors in the current proxy season. The rest opted for the three- year transition window. Under the Banking Regulations Act, 1949, banks must change their auditors every four years. The body called on shareholders to vote against reappointment of vintage auditors, despite the window period afforded by the Companies Act. Though the regulations provide a three- year transition window from April 1 for compliance, IIAS believes that good corporate governance practices transcend regulatory requirements. A cooling- off period of five years after the stipulated threshold is required to be considered eligible for reappointment. Section 139 of the Companies Act is applicable with retrospective effect, which means the existing term of the current auditors will be taken into account for computing the overall tenure. |
| Can Modi sweep out inspectors? |
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What they forgot was to bridge the gap between promise and performance. But Modi's statement has led to optimism because of his formidable reputation of walking the talk. And if he can pull it off, India Inc will be grateful to him — forever. The inspector raj has bothered companies for years, particularly the smaller ones, and been a key source of corruption. To understand the problem, let's look at a few examples of the " inspections" that are required under the law and permissions that factories need to take from a vast army of inspectors who, according to the Factories Act, have the powers to " enter any office, establishment, factory or other premises of the employer and require them to produce records for examination". The examples give an idea of why the entire process is ridiculous and simply a waste of time, energy and resources. According to the Act, a factory manager cannot ask or allow a worker to work in a factory on the first day of the week ( Sunday), unless " he has or will have a holiday for the whole day on one of three days immediately before or after the said day". That's not enough. The manager must, in advance, deliver a notice at the office of the inspector of " his intention to require the worker to work on a Sunday". He also has to display a notice to that effect in the factory. If you fail to follow the procedure, all that you have to do is pay a fat bribe to the inspector who will otherwise harass you for " violation" of rules. There are other absurdities, too. For example, all inside walls, partitions, staircases and roofs need to be whitewashed once in 14 months, or revarnished and painted once in three years with washable paint or once in five years with non- washable paint. Besides, all doors, window frames, other wooden or metallic framework and shutters should be painted or varnished at least once in five years. Most importantly, the dates of whitewashing, painting or varnishing and so on should be noted in the prescribed register to the satisfaction of the inspectors. Here is another gem. Every factory is required to provide " adequate and suitable" (the interpretation depends on the inspector) facilities for washing and drying of wet clothes and storing of clothes not worn during working hours. Also, factories have to provide sitting arrangements for employees " who are required to work in standing position in order that they may take short rests in the course of their work". And the factory management has to maintain detailed registers or records in forms, as may be prescribed by the state government in the rules. You need permission even if you install a generator in your factory and the permission is a long and painstaking process. Even if one forgets the massive amount of paperwork, the government has to employ a battalion of employees with the designation of inspectors whose only work is to harass industry. Your woes won't end by dealing with one inspector since they come in all shapes and sizes. Over 44 central labour laws and nearly 100 state laws provide for chief inspector of factories; labour inspector; factory inspector; minimum wage inspector; vigilance inspector and health and safety inspector. There is also a provision for " bonus inspector" and " general inspector". A typical factory has to maintain the following registers: muster rolls ( separate for adult workers and children); register of accidents and dangerous occurrences; inspection book; overtime records; salary register; fine deduction register; wage slips and so on. In that respect, Modi's stated plan of allowing companies to self- certify that they were complying with labour laws instead of annual inspections throughout the year will go a long way in improving India's rank of 134 in a list of 189 countries, compiled by the World Bank's Ease of Doing Business ranking. Sundays and keeping detailed records of when the premises were whitewashed HUMAN FACTOR SHYAMAL MAJUMDAR |
Practising Company Secretary
Chennai
Mobile 93810 11200
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