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Dr Sudhir Kapur, Member CII National Council , Parvez Hayat,IPS,Chief Vigilance Officer and President, Vigilance Study Circle (Delhi&NCR) , at the 2nd Roundtable Interaction between Chief Vigilance Officers of the public sector and their counterparts, the Compliance Officers from the private sector.
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― Robert E. Davis, Assuring IT Legal Compliance

Reserve Bank of India should be
audited: Shashi Kant Sharma, CAG

Thesynergyonline Audit Bureau


Need to consider financial regulator like the Reserve Bank of India (RBI) to be audited
In India, CAG does not audit the RBI, whose auditors are appointed by Central Government under the provisions of the RBI Act; CAG conducts audit of other financial sector regulators like SEBI, IRDA and PFRDA but does not conduct performance audits
In the light of the growing incidents of financial frauds, it is a thought for consideration as to whether, in future, our audit should look into the risks and vulnerabilities facing our financial sector as well as the ability and effectiveness of regulators to mitigate such risks
The objective should be to achieve the desired level of assurance, with respect to the effectiveness and functioning of financial sector regulators.
"There is a belief that a significant part of NPAs could be amounts fraudulently obtained as advances from the banking system. There is also a belief that a large part of these amounts may have been transferred abroad and may never get recovered", said Mr. Sharma.
"There is also a belief that a large part of these amounts may have been transferred abroad and may never get recovered", said Mr. Sharma.
A lot of attention has been given to frauds committed against banks, especially the public sector banks that are struggling with enormous amounts of non-productive assets or NPAs.
"There is a belief that a significant part of NPAs could be amounts fraudulently obtained as advances from the banking system. There is also a belief that a large part of these amounts may have been transferred abroad and may never get recovered", said Mr. Sharma.
 

 

NEW DELHI, JULY 01 :
There is a need to consider financial regulator like the Reserve Bank of India (RBI) to be audited, said Comptroller and Auditor General of India (CAG) Mr Shashi Kant Sharma said at an ASSOCHAM event in New Delhi on Friday.

"In India, CAG does not audit the RBI, whose auditors are appointed by Central Government under the provisions of the RBI Act; CAG conducts audit of other financial sector regulators like SEBI, IRDA and PFRDA but does not conduct performance audits", said Mr Shashi Kant Sharma, Comptroller and Auditor General of India (CAG), while inaugurating '3rd National Conference on Financial & Corporate Frauds,' organized by The Associated Chambers of Commerce and Industry of India (ASSOCHAM). .

"In the light of the growing incidents of financial frauds, it is a thought for consideration as to whether, in future, our audit should look into the risks and vulnerabilities facing our financial sector as well as the ability and effectiveness of regulators to mitigate such risks", said Mr Sharma.

"I am sure, the developments in the USA and the UK will suitably inform such a discourse. The objective should be to achieve the desired level of assurance, with respect to the effectiveness and functioning of financial sector regulators", said the Comptroller and Auditor General of India (CAG).

Comptroller and Auditor General of India (CAG) Mr Sharma said, in recent times, a lot of attention has been given to frauds committed against banks, especially the public sector banks that are struggling with enormous amounts of non-productive assets or NPAs. "There is a belief that a significant part of NPAs could be amounts fraudulently obtained as advances from the banking system. There is also a belief that a large part of these amounts may have been transferred abroad and may never get recovered", said Mr. Sharma.

There should be a comprehensive strategy to deal with them in order to safeguard the integrity of the financial system as well as the enormous public interest, said Mr Sharma.

In a country that is largely financially illiterate, the possibility of fraud is much higher. Promoting financial literacy is a long term strategy for mitigating this risk. At the same time, the regulators have to work together to not only enhance their capacity to deal with financial frauds, but also to remove any regulatory arbitrage.

The emerging international trend of the oversight of the regulators, in order to provide a higher level of assurance, is an interesting development that must be watched to inform our own system of oversight and assurance, highlighted Mr. Sharma.

The developments in the USA and the UK echo demand for more accountability and transparency of the financial sector regulators, as the spate of scandals the world over has subjected the world to unprecedented stresses and turmoil, and there are demands for a higher level of assurance of the functioining of the financial sector regulators.

Others who spoke at the conference were Mr Sandeep Jajodia, senior vice president ASSOCHAM, Ms Preeti Malhotra, Chairperson, ASSOCHAM National Council for Corporate Affairs, Mr Anil Roy, partner, Grant Thornton India and Mr Devamalya Dey, co-chairman, ASSOCHAM National Council on Corporate Fraud & Internal Audit.

President inaugurates Civil Accounts Day, 2016 , emphasizes on the need of e-Governance initiatives

Thesynergyonline Accountancy bureau

NEW DELHI, MARCH 01: The President of India Mr Pranab Mukherjee , inaugurated the 40th Civil Accounts Day at Vigyan Bhawan here in New Delhi on Tuesday The event was organized by the Office of the Controller General of Accounts, Ministry of Finance, Department of Expenditure to mark the foundation day of Indian Civil Accounts Service. On this day, in the year 1976, the Union Government Accounts were delinked from Indian Audit and Accounts Service and Indian Civil Accounts Organisation came into existence.

Speaking on the occasion the President of India put the decision of separating accounts from audit in a perspective- 'The founding fathers of our Constitution placed significant importance on accounts and audit of the Union Government and States. Several Constitutional provisions prescribe for the financial accountability of the Executive to Parliament, and the financial management of the affairs of the Union and the States.

The Government recognized that if the process of development is to be speeded up, and plans and programs are to be properly implemented, reforms had become necessary in the field of public financial administration. Separation of accounts from audit was therefore clearly the right decision to take.'

He emphasized on the need of e-Governance initiatives to fulfil the dream of becoming a welfare nation. He said- 'We must therefore continue to harness and leverage e-governance capabilities for improving the lives of the poor and needy, so as to transform India to a more compassionate welfare society. Our programs and social welfare measures must reach the poorest of the poor, so as to enable the needy to be partners in the nation's growth and development.'

Presiding over the function the Finance Minister, Mr Arun Jaitely appreciated the Civil Accounts Organization for developing effective tools of PFM. He said, 'The Public Financial Management System (PFMS) has evolved into a useful MIS tool for the Central government. It has also become a successful payment platform for disbursal of funds for the schemes covered under Direct Benefit Transfer (DBT). Using DBT and PFMS, the Government has now demonstrated that it can accurately target beneficiaries, reduce leakages by eliminating duplication, and increase efficiency of the delivery process. We are now in a better position to target actual beneficiaries and control expenditures in a transparent manner.'

He urged the CGA to use PFMS as the vital link to connect the dots of the JAM triad for providing DBT benefits to the intended sections of our society.

FM stressed the need of major reforms in PEM to measure the outcomes. Highlighting it, he said- 'CGA can play an important role towards improving public expenditure management by commissioning specific studies that evaluates and measures performance in implementation of national priority programs. Outputs and outcomes can be measured. What is measurable can be made accountable. Our objective is to learn from past experiences in the implementation of major projects and schemes, and rectify weaknesses through suitable modifications in the design of future projects.'

The Finance Minister, Mr Arun Jaitely further said that the prevailing economic scenario across the world is challenging and this year's Budget was prepared and presented at a time of unusual volatility in the international economic market. Markets are fearful that the global recovery may be faltering. Against this grim background, India stands-out as a haven of stability and opportunity. Its macro-economy is stable, founded on the government's commitment of fiscal consolidation and low inflation. Its economic growth is amongst the highest in the world. These achievements are remarkable because they have been accomplished in the face of weak export demand and a second successive season of poor rainfall.

Finance Minister, Mr Arun Jaitely said that the task now is to sustain them in an even more difficult global environment. This will require sound economic management. Fiscal policy will continue to be vital in an uncertain global environment, while sustaining growth. On the Government's "reforms-to-transform" agenda, a series of measures have been enacted which should increase the supply potential of the economy. We want to create wealth and spread that wealth across the economy especially to farmers, the vulnerable and disadvantaged groups. Sabka Saath Sabka Vikas is our guiding philosophy which we will strive to meet every day.

The Comptroller & Auditor General of India, Sh. Shashi Kant Sharma briefly touched the background in which accounts were separated from the audit.

He underlined the provisions of FRBM Act to shape the paths for some more important disclosures. He said-'Under the Fiscal Responsibility and Budget Management Act, there is disclosure on what revenues the government has to realize and the revenue which is due but not realized. Similarly, I feel there should be proper disclosure of what the government owes in terms of unpaid claims for goods and services already supplied or consumed by it. Similarly, improving the system of asset accounting continues to be part of the unfinished agenda as it is also an important ingredient of the government's obligations under the Fiscal Responsibility and Budget Management Act.'

CAG informed the gathering about the big data centre established in his office. Referring to the challenges in dealing with big data Mr. Sharma said- 'The potential of using the mass digital data generated in the process of compilation and consolidation of government accounts is huge. We have initiated steps to deal with the challenges posed by big data. One of the biggest databases that would merit the application of advance data analytics tools is the data on government accounts from the transaction level to the highly aggregated accounts presented to the Parliament.'

Tracing the outcomes of departmentalized accounts The Finance Secretary, Shri Ratan P. Watal said- 'The management accounting function is now well entrenched in the Executive. Line Ministries and Departments today take complete responsibility for their spending decisions, and the resultant outputs and outcomes of budget allocations voted by Parliament. Prescribed timelines for closure of monthly and annual accounts are complied with.'

Mr. Watal acknowledged the role of PFMS in DBT and said- 'I must specifically mention the role played by the Public Financial Management System (PFMS) in facilitating timely payments to the poor and needy people of our country in respect of social sector schemes administered through the DBT mode. PFMS has become a game changer and has led to significant efficiency gains for the Government. It is for this reason that Government intends to further strengthen the capacities and capabilities of PFMS and transform it to an Integrated Financial Management Information System.'

The Controller General of Accounts, Mr Mohan J. Joseph, while welcoming the President of India and other guests highlighted the major initiatives and achievements of the Civil Accounts Organisation in the 40 years of its existence.

Assuring all the stakeholders of continuous reforms Mr Joseph said-'Reforms in public financial management are a continuous process. From time to time, structural changes take place in the economy, as well as in the functioning of the government which demand accounting data on public finances to be available to decision makers, often on real time basis. This demand for faster information can only be met through adoption of technology in the banking sector, since banks play a pivotal role in the treasury operations. Recognizing this need, the Service has since its inception, been a pioneer in the use of Information Technology in payments, Accounting and Financial Reporting.'

Slideshow on Vigilance

Public and private sectors meet to discuss forensic accounting and whistle blower policy

Thesynergyonline Accountancy Bureau


NEW DELHI, JANUARY 18 :
CII and The Vigilance Study Circle (Delhi & NCR) convened the 2nd Roundtable Interaction between Chief Vigilance Officers (CVOs) of the Public Sector and their counterparts, the Compliance Officers from the Private Sector on 18th January 2016.

Key issues that were discussed during this Interaction are Forensic Accounting and Whistle Blower Policy.

Mr KV Chowdary – Central Vigilance Commissioner who was the chief guest, said we have to look into forensic investigation, being a wider area on a larger note instead of forensic accounting. He mentioned that automation can easily identify the issues and cause.

Offering interesting anecdotes to elucidate instances of corruption – illicit and implicit, he stressed on the necessity to identify what situation would most likely lead to corruption and devising ways to pre-empt and prevent it.

He spoke about shell companies and multilayered transactions/roundtrip transactions and shared a case study on how actually automation helps and the other side automation has made blind in conducting forensic audit. He spoke on usage of IT to detect the fudging activities. He said awareness on the ways that fudging can be detected can keep the wrongdoers away.

The CVC referred to articles 32 & 33 of UNCAC on whistle blower protection and spoke on usage of the policy in a right way and, how it is misused. He also pointed out that though it is misused sometimes it serves a greater purpose in finding out corruption. He stressed that he is concerned on witness protection since it is very sensitive, he added that we have to bring some changes to override Evidence Act to provide some confidence to the whistle blower. The CVC stressed that both public and private sectors should educate the employees on whistle blower policy. He suggested that common people should be able to understand the Whistle Blower Act and how to raise a complaint.

Dr Sudhir Kapur, Member CII National Council in his welcome address spoke on the focus points of this interactive session – Forensic Accounting and Whistle Blower Policy. He also referred to corruption as an issue and use of IT as an enabler to counter act the corruption and, stressed on implementation of a whistle blower policy.

Mr Parvez Hayat president, Vigilance Study Circle (Delhi NCR Chapter) in his address detailed the importance of VSC and vigilance activities carried out by the public sectors through CVC. He said public and private sector should support each other and work towards fighting corruption as a common objective. He also mentioned that through these for a one can identify and share thoughts on corruption issues arising in public and private domains.

Ms. Tejal Patil, General Counsel, GE – shared GE credentials on ethical practices. She said that a whistle blower policy should have the following components.

• Objective should be to improve the compliance process of the company

• Faith in the process – independent investigation process

• Fast response time

• Protection of the whistle blowers

• Create an open environment

Ms. Sandhya Vasudevan, COO, Deutsche Bank – mentioned that major challenges will be on maintaining records, relevance of it when there are subsequent changes of investigation techniques in the future. She recommended a collective working towards eradicating the corruption.

Mr K Subramaniam, AG, J&K – said that whistle blower is an ethical dilemma; he also mentioned that whistle blower is currently recognised as an instrument to bring out the corruption cases across public and private sectors.

He shared other countries whistle blowing policy, timelines and shared some international and domestic case studies. He spoke on need for whistle blowing, areas of application, types of whistle blowers, elements of PID (Public Interest Disclosure), Barriers to whistle blowing, retaliation against whistle blowers, protection to whistle blowers, assessing the risk of reprisal, maintaining confidentiality and incentives to disclosures. He touched on Sarbanes- Oxley Act 2002, UNCAC and Public Interest Disclosure and Protection of Informer (PIDPI) and problems with the present system in India.

Ms Arpita Pal Agrawal, Partner, PWC – stressed that the corporates should have strong compliance systems and it is the sustainable way to run business the long run. She gave statistics on global level frauds, types of frauds (internal and external), industries at risks, departments where fraud can occur (Accounting) and methods on fraud detection. Spoke on fraud triangle, fraud profile of an employee, Shared case studies on financial frauds. Investigation has three pronged approach.

1. Documents

2. Technology

3. Intelligence

And 4th pillar is Enforcement Agencies

Mr Shikhar Jain – Principal Counsellor CII- ITC Centre of Excellence Sustainable Development – have shared the project details on Promotion and Adoption of Responsible Business Practices by Corporates in India carried by CII_ITC CESD with World Bank. He urged participants to share the case studies and help CESD to move further on the project to work together with Public and Private Sectors.

At the end, it was agreed that these interactions would be held from time to time to learn from each others' experiences and best practices.

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