When facing problems, cos should also look at strengthening audit committees, independent directors: NFRA chief

economictimes.indiatimes.com:

audit committees and empowering independent directors, NFRA chief Ajay Bhushan Prasad Pandey said on Friday as he mentioned about the trend of companies setting up advisory boards for governance. The Chairperson of the National Financial Reporting Authority (NFRA) also emphasised that he was not saying that an advisory board for a company should not be there as that always adds to the value.

«In recent times, there have been many companies and it is well reported in media, it may be the old school company or the new age company… whenever there are huge problems or whistleblowers at these companies… there is a tendency to appoint some advisory board for governance and take some people. »It is a very good trend.

I must welcome this… but then you have (audit committees), independent directors, why don't you strengthen them," Pandey said. Without taking any names, he said such companies should also strengthen their audit committees and empower independent directors and auditors.

In recent times, there have been instances of some companies, which are facing governance and other issues, constituting advisory boards. Speaking at a conference organised by industry body Assocham, Pandey mentioned that some statutory auditors come to him in private and say that «if you ask too many questions, the management frowns».

«The management should be encouraging the auditors… can you help us find (if there are any lapses)… that is the empowerment needed for auditors,» he noted. He also assured the audit fraternity that NFRA is not a «kind of a villain» and that the regulator is there to assist them and improve the system.