In a significant address at the World Forum of Accountants (WOFA) in Greater Noida, Uttar Pradesh, Insolvency and Bankruptcy Board of India (IBBI) Chairperson Ravi Mital called for a strategic reduction in compliance requirements while ensuring that regulatory effectiveness remains robust and uncompromised. This statement underscores a growing emphasis on streamlining corporate governance frameworks without diluting their impact.
Focus on Corporate Governance and Regulatory Efficiency
Mital, speaking at a session organized by the Institute of Chartered Accountants of India (ICAI), highlighted the critical need for better implementation of existing laws. He stressed that the goal should be to achieve lesser compliance burdens without reducing the effectiveness of regulations, pointing out that there is no shortage of rules but rather a need for them to be more impactful.
Collaborative Efforts with Key Institutions
The IBBI, a pivotal institution in enforcing the Insolvency and Bankruptcy Code (IBC), has initiated steps to simplify compliance. Mital revealed that the board has engaged IIM Ahmedabad to review its regulations and make compliance requirements easier for businesses. This move aims to foster a more business-friendly environment while maintaining strict oversight.
Insights from Sebi and NFRA Leaders
Joining Mital at the event, Sebi Chairperson Tuhin Kanta Pandey and NFRA Chairperson Nitin Gupta shared their perspectives on regulatory frameworks and corporate ethics. Pandey emphasized the importance of deeper collaboration with chartered accountants, noting that while regulations can set minimum standards and enforce frameworks, they alone cannot cultivate an ethical culture. He also remarked that technology could enhance audit processes, but credibility ultimately depends on character.
Gupta discussed the concept of viability assessment for companies, particularly in cases where entities enter insolvency resolution despite being operational as 'going concerns'. He suggested extending the assessment horizon beyond the current 12-month timeframe to provide a more comprehensive evaluation. Additionally, Gupta proposed that ICAI consider introducing a separate refresher course for accounting professionals, similar to practices in other fields.
Enhancing Accounting Standards and Corporate Oversight
Mital further suggested that ICAI re-examine accounting standards to ensure audits by chartered accountants are as rigorous as those conducted by the Comptroller and Auditor General (CAG). He also floated the idea of external evaluations for company boards and pondered whether shareholders should have nominee directors in corporations, alongside an improved communication framework to ensure shareholders are as informed as management.
Role of Chartered Accountants in Economic Growth
ICAI President Charanjot Singh Nanda, addressing the gathering, described chartered accountants as 'financial soldiers' and highlighted their contributions to increasing GST collections. With over five lakh members, ICAI plays a vital role in upholding financial integrity and supporting India's economic development through stringent auditing and compliance practices.
This collective dialogue at WOFA reflects a concerted effort among India's top regulatory bodies to balance ease of doing business with strong governance, aiming to boost corporate transparency and efficiency in the evolving economic landscape.
