Beruflich Dokumente
Kultur Dokumente
Effective Corporate Governance practices, including a requirement of strong internal controls that implement the accounting standards. Auditing practices that give confidence to the outside world. Enforcement or oversight mechanism that ensures that the principles as laid out by accounting and auditing standards are followed.
Accounting Standards
Pronouncements issued by the Institute of Chartered Accounts of India Relating to the various aspects of
recognition measurement presentation disclosure
Accounting Standards
Purpose of Accounting Standards Standardise diverse accounting practices with a view to
eliminate to the extent possible incomparability of information
Accounting Standards
Legal Force : S.211 of the Companies Act, requiring every profit and loss account and balance sheet of the company shall comply with the Accounting Standard. Accounting Standard means standards of accounting prescribed by ICAI.
Since 1973, IASB - serving public interest by developing a single set of high-quality, understandable and enforceable IFRS for investors, lendors and users.
Many other countries are replacing national GAAP with IFRS for some or all domestic companies. IASB and the US counterpart, the Financial Accounting Standards Board, have embarked on a comprehensive program aimed at converging IFRS and US GAAP. SEC recognises IFRS of the 13000 Companies registered with US SEC, 1200 are non US companies. To do away with reconciliation by end of decade website : www.iasplus.com
Standards Overloads
Rules-based Standards or Principles-based Standards Too many Standards - Too Complex - Cost Benefit Ratio Is there a size test : Smaller & Larger
What is size : Determined by Assets, Revenues, Net Worth, Ownership ?
Standards Overloads
Movement towards Principle-based Accounting Standards could turn out to be Less Beneficial to Employees Compensated Absences (FAS 43); Post Retirement Benefit (FAS 106)
Business Community represented that they will be forced to reduce Employee Benefits Accounting Fraternitys View - Behaviour was long overdue as financial statements did not represent true and fair
Dissatisfaction can lead to escalation .. FEOs intervention on stock options expensing or financial derivatives.
Regulatory Issues
SEBI as the regulator ..
Introduced Qtrly Unaudited Results effective June 1998 Qtr . Clause 32 Limited Review by Statutory Auditors wef Half Y/E 30th Sept, 2000 Changes in Listing Agreement resulting in
Publishing of CFS in addition to Stand Alone Accounts wef Y/E March 2002 To comply with Related Party Transaction AS 18 wef Y/E March 2002
Regulatory Issues
SEBI as the regulator ..
Segment Reporting on Quarterly basis as per AS 17 wef Qtr ending Sept, 2001 . Clause 41 To comply with AS 22 Accounting for Taxes in respect of Qtrly Results wef Sept, 2001 Clause 41 Optional to do Quarterly CFS .. Clause 41
any material event strike, lock out, changes in capital structure
Regulatory Issues
SEBI as the regulator ..
effect of amalgamation, acquisition/disposal of subsidiary and long term investments qualification of auditors/how addressed
Uniform accounting policies to be followed Rules relating to Insider Trading Powers of Inspection and calling for any information Formation of Kumaramangalam Birla Comm on CG Nov 99 / SEBI accepted Dec99.Clause 49
Corporate Governance
Naresh Chandra Committee formed immediately upon SOX for amendment of Companies Act. Followed by Narayanmurthy Committee Based on Narayanmurthy Committees recommendation
Revised Clause 49 issued on 29th October, 2004 effective 1.4.2005
Corporate Governance
Mandatory Provisions in Corp Governance
All fees/compensation paid to non-executive directors including independent directors only with shareholders approval in general meeting.
Company shall publish criteria of making payments to nonexecutive directors in Annual Report on website. Co shall disclose no. of shares and convertible instruments held by non-executive directors. Non-executive directors to disclose their shareholding in the listed Co they are appointed prior to appointment. To be disclosed in the notice to general meeting called for appointment.
Corporate Governance
Mandatory Provisions in Corp Governance Board shall periodically review compliance reports of applicable laws to the Company; steps taken by the company to rectify instances of noncompliance. Code of conduct for Board members and senior management - to post in website of the Company.
All Board members and senior management to affirm compliance annually and Annual Report to have a declaration.
Corporate Governance
Mandatory Provisions - Audit Committee Comprising of at least 3 directors and two-third being independent directors. All members shall be financially literate (ability to read financial statements) and at least one member shall have accounting or related financial management expertise (experience in the area or professional qualification).
Corporate Governance
At least 4 meetings a year and not more than 4 months shall elapse between 2 meetings. Audit Committee to mandatorily review :
M, D & A of financial conditions and results Statement of significant related party transactions Management letters/letters of internal control weaknesses issued by statutory auditors. Internal audit reports relating to internal control weaknesses Appointment, removal, terms of remuneration of Chief Internal Auditors.
Corporate Governance
Mandatory Provisions
Risk Management - Procedures to inform Board members about risk assessment and minimisation procedures
Periodical review of procedures to ensure management controls risk through means of a properly defined framework.
Corporate Governance
Mandatory Provisions
CEO and CFO Certification : Certify to the Board that they have reviewed the financial statements and Cash Flow Statement and
they do not contain materially untrue statement or omit any material fact or misleading statements; they present a true and fair view of the Companys affairs and are in compliance with existing accounting standards, applicable laws and regulations; to the best of knowledge and belief, no transactions entered during the year which are fraudulent, illegal or violative of the companys code of conduct;
Corporate Governance
Mandatory Provisions
CEO and CFO Certification : Certify to the Board that they have reviewed the financial statements and Cash Flow Statement and they
accept responsibility for establishing and maintaining internal controls; evaluated the effectiveness of the internal control systems of the company; and disclosed to auditors/Audit Committee deficiencies in designing and operating of internal controls.
Corporate Governance
Mandatory Provisions Independent Director
no material pecuniary relationships or transactions apart from remuneration received with company, promoters, senior management, holding company, subsidiaries & associates; not related to promoters or board members/senior management; has not been an executive of the company in the preceding 3 financial years;
Corporate Governance
Mandatory Provisions Independent Director
is not a partner/executive in the last 3 years of statutory/internal audit firm. Legal/consulting firm with material association; not a material supplier, service provider, customer, lessor, lessee affecting independence of the directors; not a substantial shareholder of the company (2% holding)
Corporate Governance
Mandatory Provisions - Subsidiary Companies
At least one independent director of the holding company shall be a director on the BOD of a material non-listed Indian Subsidiary. Audit Committee of listed holding company shall review financial statements, in particular, the investments made by the unlisted subsidiary company.
Corporate Governance
Mandatory Provisions - Subsidiary Companies
Minutes of Board meetings of the unlisted subsidiary company shall be placed at the Board meeting of the listed holding company. The management should periodically bring to the attention of the BOD of listed holding company, statement of all significant transactions and arrangements entered into by the unlisted subsidiary company.
Corporate Governance
Mandatory Provisions Disclosure of Accounting Treatment
Auditors report changes .. S 211(3C) Companies (Amendment) Act, 1999 .. to certify in their report to the shareholders that all applicable accounting standards have been complied
Investors Require
better & prospective info industry outlook corporate strategy to withstand competition intangible assets statement of strategic goals innovation
Value Strategy
depth and clarity of strategy
no conflict between the two goals of shareholder value creation and societal value creation.
2.
3.
4.
Employees Health & Safety; Career Prospects; Regular intervention with Unions, representat6ion/participation Ethical Standards; Attracting & of employees in EHS and social initiatives retaining talent, satisfaction and commitment Communications Air & water quality, Environment Neighbourhood, need based discussions & communication quality Customers Customer & market survey, customer compliment records, redressal systems etc. Quality, costs, delivery, innovation, services
5.
Linkages between sustainability performance and key value drivers such as brand image, reputation, future asset valuation are awakening mainstream financial markets. Move away from conventional financial accounts to create a more complete picture of long term growth.
Social Sights
Greening Wastelands Irrigating Drylands Creating Women Entrepreneurs Educating Rural Children Enhancing Livestock Quality
Furthering use of climate-neutral fuels as against fossil fuels Water Positive Company
Reduce fresh water intake Recycle water Efforts to enhance rainwater harvesting potential
Thank You