The Comptroller and Auditor General of India (CAG) Vinod Rai on Friday called upon India Inc. to do some “soul searching” and put a stop to the increase in ethical deficit.
Calling upon Corporate India to improve business practices the CAG said: “Business practices of some corporate houses have become the subject of increasing public scrutiny for their perceived ethical deficit. Corporate India needs to go through a phase of reflection and soul searching.” He was addressing the National Conference and Annual Session 2011 of CII here.
Mr. Rai said recent corporate scandals have tarnished the country’s image at a time when the economic growth has been good. “The Satyam Computers saga caused enormous damage to the India shining story. In recent times, corporate scandals in sectors like telecom and mining have caused widespread dismay at the current state of governance,” he added.
“The quality of financial reporting adopted by the companies needs to be substantially improved. Companies should follow high disclosure standards. The risk factors and off-balance-sheet items affecting company’s performance should be adequately disclosed,” he said.
Mr. Rai said there is increasing pressure to provide transparent and accountable governance and address concerns relating to accurate and fair accounting, fair practices and socially responsible behaviour.
“A sound policy on corporate governance, business ethics and corporate social responsibility to regain public trust and overcome the environment of negativity has become a necessity. Corporate culture must be in consonance with the best practices relating to transparency, accountability and good governance,” he said.
The CAG said companies need to integrate ethics into corporate culture and go for a balance between the need for embracing a stringent code of conduct and standards of business.
According to him, there should be clear cut authority and resources for fulfilment of duty by supervisory and regulatory authorities should have clear cut authority and resources to fulfil their duties.