CLB chief wants CAs to stick to knitting

Chartered Accountants should only be involved and concerned with the accounts "" the balance-sheet and the profit and loss of a company. They should not be allowed to render other related services like tax consultancy and consultancy services, according to S Balasubramanian, chairman of Company Law Board (CLB).

Addressing an interactive session at the Merchant's Chamber of Commerce, Balasubramanian said chartered accountants and CA firms should not have an interest in rendering any other service to a company whose books of accounts were being audited by that firm. "This takes away the essence of audit and the spirit of auditing a firm," he explained.

The government was also considering a provision whereby persons not directly associated with a company but with decision making power in family-run but listed businesses were made accountable.

While answering a query raised by the Chamber's president, K B Agarwala, Balasubramanian said independent directors will also have to be made responsible for decisions adopted in their tenure. The remuneration of such directors was being considered by the government.

"An independent director should be accountable for decisions depending on the area of operation they are involved in," Balasubramanian added.

On the issue of paying dividend to shareholders, Balasubramanian said that the decision to transfer the dividend to a bank account within five days of declaration was taken to guard the interest of the stake holders.

"There were instances when a company has declared dividend despite the fact that they do not have enough fund to fulfil their announcements. There were instances where dividend cheques are printed but not posted until and unless someone makes a complaint," he stated.

Balasubramanian said the Companies (Amendment) Bill 2003 which seeks to curb the powers of the board of directors under the Sec 293 enabling a board to sell, lease or dispose of the undertaking of a company up to 20 per cent of a company's assets, was being re-examined by the government.