PSUs won’t get to bypass CAG
Public sector companies’ dream to avoid the watchful eyes of the top government accountant, the Comptroller and Auditor General of India (CAG), may not come true. The government has decided to retain CAG’s oversight over how state-run companies manage their finances despite the J J Irani panel on the new company law making a strong case to do away with the dual auditing of public sector companies. The government has rejected this proposal, while accepting most of its suggestions on the proposed new company law. While giving private sector companies more functional freedom and less interference from government, the ministry of corporate affairs has decided not to leave the CAG’s grip over state owned companies. Public sector companies will have to get CAG’s approval for appointment of auditors. Besides, the CAG will be empowered to do supplementary audits on the audit done by the statutory auditor. However, the entire process will be made time bound in the proposed new company law so that finalisation of the financial statements of government owned companies do not get un-necessarily delayed as it happens now. Besides, the government does not intend to give any special relaxations to PSUs in matters relating to financial disclosure or audit norms. If the CAG does not appoint a statutory auditor within six months, the central or state government, which is the majority shareholder in the company, can appoint its own auditor. The Irani panel believed that the CAG audit in addition to the normal audit causes avoidable delays and it was a repetition of labour. Experts also believed that if PSUs were to grow and have professional management, they should not have un-necessary hassles in their operations. The government, however, has not bought this argument