NEW DELHI, Oct 24:
Boosting its efforts to prevent corporate frauds, the Ministry of Corporate Affairs is working on a stronger alert mechanism to detect discrepancies in various filings made by companies.
Coming against the backdrop of rising concerns over governance and financial mismanagement at various companies, the Ministry is developing the system that would be integrated with the new reporting format XBRL.
“We are working on a stronger XBRL mechanism that will help in getting automatic alerts about irregularities in the filings made by companies,” a Ministry official said.
Currently, the Ministry has an alert system in place to detect discrepancies in the companies’ filings. The system is based on certain criteria, including those related to a company’s financials.
According to the official, efforts are on to boost the existing mechanism, by including more parameters, “that would automatically detect irregularities and provide alerts on the same”.
However, specific details were not disclosed.
Without disclosing specific details, the official said, “the overall effort is basically aimed at detecting frauds at companies”.
In recent times, many financial irregularities and governance issues involving companies have come to light.
To ensure better transparency, the companies are now required to furnish financial statements in the eXtensible Business Reporting Language (XBRL) format, replacing the PDF format.
Earlier this month, the Ministry had raised concerns about misleading inaccuracies in financial disclosures made by some companies in filings made through the XBRL format. The discrepancies were noticed during a random check of documents filed by firms.
The Ministry had said that such filings are inaccurate and do not adequately represent true and fair view of the company’s state of affairs as per Section 211 of the Companies Act, 1956.
These issues have also been brought to the notice of representative bodies of chartered accountants, cost accountants and company secretaries.
Interestingly, the inaccuracies were found in e-forms that were certified by “Chartered Accountant/Company Secretary/Cost & Works Accountant professionals for their completeness and correctness in representation with respect to audited financial statement of the company”.
“Such lapses defeat the very purpose of introducing XBRL filings which are meant to elicit more detailed and refined information as to affairs of companies,” the Ministry had said in a communication. (PTI)
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