Posts Tagged ‘Ministry of corporate affairs’

Government to Set Up New Vigilant System to Track Corporate Frauds

Government to Set Up New Vigilant System to Track Corporate Frauds

Government to Set Up New Vigilant System to Track Corporate Frauds

The Government has embarked on a new vigilant system to track the corporate frauds post Satyam scam debacle.

As a part of this, it has decided to look into companies whose financials are found to be suspicious.

Ministry of corporate affairs has said that the government’s new drive will be technology-driven and bank heavily on the MCA21 e-governance programme, which is now the main gateway for corporates to file their statutory documents.

🙂

This is part of govt’s efforts to have an effective early warning system and the idea is to detect frauds, or any tendency of fraud, early.

Meanwhile, pilot work on the project has already been kickstarted.

🙂

Government has plans to involve the regional directorates (RDs) and registrar of companies (RoCs) in the exercise after it gets computer-generated alerts on suspect companies through the e-governance network.

“There will be several triggers to generate any suspicion on the activities of a corporate. These include things like unusually high jump in profits, suspect related party transactions, and huge amounts of unutilised cash and bank balance,” sources from govt stated.

Once a list of suspect companies is drawn up, these would be looked into by the RDs and the RoCs who would look into their filings and financials further.

However, this would be a non-invasive document verification exercise with no intention of hounding the corporate sector.

🙂

Government is taking steps to further strengthen the MCA21 programme which enables electronic filings, storage, retrieval, processing and transmission of transactions, including incorporation of a company, and filing of annual and statutory returns.

The exercise to upgrade MCA21 has started, officials said.

🙂

The government has also decided to become more vigilant in view of the recent surge in stock markets and feels that extra caution and early detection will help protect retail investors further.