BIG scams, BIG people, BIG conspiracies, BIG failures of the Government...really? How can we even dare to imagine something devastating could have happened all of a sudden, as if heavens had collapsed without even alarming us, and shattered the planet earth.
We as laymen, or as inspired to categorize by the social media, call it a Government failure. Is it that easy to plot such big scams? Were the so talented and such highly paid fund managers, risk assurance and corporate governance guys enjoying the fairy dreams when the seeds of such a poisonous crop were been sowed?
I am trying to divert your attention from such big failures to the smaller drops which make these oceans. Millions of micro, small and medium size entrepreneurs and companies who could actively been engaged in such misappropriations and fraudulent activities causing loss to the exchequer. Who is going to deal with them and when? The laws permit such entities, including individuals, to appoint they statutory auditors on their personal choices, without even establishing a conflict of interest between the two parties.
Here the law of demand and supply plays a crucial role in damaging the national interest. The supply of such advisers and accountants is so distorting that most of them would agree to sign off anything for petty fee, reason being bread and butter. The oath of not doing anything that is detrimental to the national interest becomes manure to grow the plant of their career tree. Both live happily at the cost of damage to the national economy. The moment an auditor qualify a report, they would be fired because the worked against the law of demand and supply. And the other one is ready to grab their piece of bread by compromising their integrity and the oath to protect the national interest because no one is watching.
There are quite a simple way to deal with this flaw by applying it on every single entity, Private Limited companies, to start with -
- Auditors rotation at shorted frequencies
- Board rotation at shorted frequencies with a government representative on every single Board
- Appointment of auditors by a central government agency, of not the Comptroller and Auditors General of India
- Independent agencies to investigate conflict of interest between assesses, statutory auditors, internal auditors, board of directors, using forensic skills
The cost of setting up such infrastructure would be minuscule comparing to the financial damage being caused by such small players.
Ultimately, it depends on interest and intent of the law makers whether they want to keep focus on everyone on just the BIG fishes or the termites who are permanently demolishing roots of the tree that's not growing as expected. If we really want to relish the fruits and shade of this tree, it's our responsibility to raise our voices against this corruption, wherever possible.
