The
Government has said that the reports appearing in a section of media indicate
that a Section 25 Company, “Thought Arbitrage Research Institute” has published
a study indicating inter alia occurrence of frauds in companies due to factors
like inadequate internal control procedures, diversion of funds by promoters/
top management, failure of audit in detection of frauds, etc. These factors are
in any case widely recognised causes of frauds in companies. Giving this
information in written reply to a question in the Lok Sabha, Shri Sachin Pilot,
Minister of Corporate Affairs, said that the Government have initiated a number
of measures to prevent and deal with occurrence of frauds in the companies. Attention
may, in particular, be invited to the following:
· Creation
of “Fraud” as a substantive offence in the recently passed Companies Bill,
2013;
· Stricter
norms of Corporate Governance and their implementation in the Companies Bill;
· Statutory
status to the Serious Fraud Investigation Office (SFIO);
· Amendments
in securities laws through Securities Laws (Amendments) Ordinance amending the
Securities and Exchange Board of India (SEBI) Act, the Securities Contracts
(Regulation) Act (SCRA) and the Depositories Act enabling SEBI to deal
effectively to violations of laws by companies and individuals including those
running Ponzi schemes;
· Increasing
application of technology for early detection of frauds though data mining and
Forensic Audit, etc.
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