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Our Bureau

Mumbai, Jan. 9 The Securities and Exchange Board of India has decided to subject all Nifty and Sensex companies to a peer review of their accounting statements in the wake of the Satyam financial scandal.

The working papers of the companies’ auditors relating to financial statements would be reviewed by peers, chosen from a panel of auditors which SEBI will nominate, said the markets regulator in a statement on Friday.

Some listed companies outside of the Nifty and the Sensex, chosen on a random basis, would also be reviewed, said SEBI.

The exercise would be taken up for the current third quarter results as well as for the audited results for FY 2007-2008.

It will start soon after the publication of the third quarter results and finish by end February, said SEBI.

The peer review was suggested by the SEBI Committee on Disclosures and Accounting Standards (SCODA) which met today to determine what could be done to “boost investor confidence in the financial disclosures made by listed entities.”

There is a need to reassure investors that Satyam is a one-off case; it is not that there are accounting irregularities everywhere, said Mr C.B. Bhave, SEBI Chairman, speaking to newspersons after a function at BSE here on Friday.

With respect to quarterly results, very few companies come out with audited statements, the majority preferring a limited review. SEBI’s peer review will look at these limited reviews, clarified a SEBI official.

Peer review is a practice actually prescribed by the Institute of Chartered Accountants of India for quality audit, said a legal expert: “SEBI is asking for the same exercise. But it is not clear who will bear the cost of this review quarter after quarter.”

Mr. Bhave also said the Chief Financial Officer of Satyam had communicated with the SEBI’s investigative team which is currently in Hyderabad; Mr Ramalinga Raju himself will be meeting with the team tomorrow.

SEBI cannot yet file a formal complaint as investigations are still going on, said Mr. Bhave. Apart from Mr. Raju’s letter there is nothing on hand, he noted. But the Ministry of Company Affairs and SEBI have obtained a magistrate’s order to impound the books of Satyam with respect to the financial results, he said.

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