Taking cue from the Satyam debacle, a doctoral student of Sardar Patel University (SPU) has called for making corporate governance standards suggested by The Institute of Company Secretaries of India (ICSI) mandatory in a study.
The study by Dhiren Chavda, which talks about corporate governance in India, has sought for a global identification of corporate governance standards of ICSI similar to Indian accounting standards or International Financial Reporting Standards (IFRS).
Talking about his study, Chavda says, "Currently, there are no compulsion on Indian companies by government to follow standards suggested by ICSI.
The study has tried to throw light on the Satyam episode and explain how the debacle was a corporate governance failure and not just mere accounting one. By making the corporate governance standards compulsory, both the government and India Inc. can avoid such Satyams in future."
Chavda adds that while the Companies Bill in the Parliament has considered some of these standards, the move should be expedited.
According to the study, "It is very clear from the Satyam episode that this was a tip of iceberg for issues related to corporate governance. The basic fundamental understanding of corporate governance revolves around systems and respect for such systems by the business world and professionals. Unfortunately, in the current world of failure of corporate governance the system checks are totally ignored. Governments are always preaching about establishment of good corporate governance and even the accounting profession has also joined the same wagon. Though the accountants while checking processes always recommend that work of a person must always be checked/certified by a different person they themselves are seen not following this approach of systems."
"The time has come that Ministry of Corporate Affairs must put their foot down and should not allow further damage to the corporate governance standards of Corporate India. The Institute of Company Secretaries of India which has been advocating of higher standards of corporate governance must be given a call by the Ministry of Corporate Affairs. The position of Company Secretaries is really independent and is not attached to any of the activities of the Company directly since it is under the control of the Board of Directors of the organization. This makes the position of Company secretary as a non-interested party in any of the departments of the organization and can take the torch of Corporate Governance at higher levels emanating more light that the current light house," the study further states.
