Financial Daily from THE HINDU group of publications
Thursday, Mar 28, 2002
Financial Daily from THE HINDU group of publications Thursday, Mar 28, 2002 |
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Corporate
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Performance Info-Tech - Telecommunications CAG finds lapses in BSNL accounts G. Rambabu
NEW DELHI, March 27 THE first annual audited accounts statement of Bharat Sanchar Nigam Ltd, which was corporatised in October 2000, has run into trouble, with the Comptroller and Auditor-General of India (CAG) finding serious lapses. According to informed sources, the CAG has found lapses in the balance sheet and profit and loss account for the previous fiscal, as well as violation of the Companies Act, 1956. The net impact of these violations on the accounts is an overstatement of profits by Rs 37.47 crore. As per BSNL's audited accounts, the net profit of the public sector major stood at Rs 747.05 crore for 2000-2001. The CAG's comments, which were placed before the board of the company recently, noted that "serious lapses in internal control were observed in the form of non-reconciliation of figures between DoT and the company, the company's corporate office and circles as well as between various circles of the company". While these circle-wise accounts were audited and certified by the respective branch auditors, the consolidated profit and loss account and balance sheet were prepared from the trial balances of the branches and certified by the main statutory auditors of the company. Thus, the final accounts of the company do not flow from the consolidation of the branch accounts as certified by the respective branch auditors, it has said. "Contrary to the company's accounting instructions, a number of basic and subsidiary books such as general ledger/journal/priced store ledger/fixed assets registers were either not maintained or were not in the prescribed format in most of the circles," the CAG noted. The CAG has stated that the balance sheet and profit and loss accounts of most sub-heads "do not indicate the correct financial position and working results of the branches, as no proper allocation of revenue and expenditure was made to the accounts of these branches that render various services and facilities to all other branches of the company". That apart, several violations of the Companies Act have been listed. Under Section 20 of the Act, the balance sheet and profit and loss account of the company for the year was required to be laid before the first annual general meeting latest by March 31, 2001, which was not done within the prescribed period. Under Section 13, the issued subscribed and paid-up capital cannot exceed the authorised capital of the company. Preference capital pending allotment amounting to Rs 7,500 crore was included under the shareholders' fund in violation of the provisions, the CAG pointed out. Also, no audit committee, in compliance with the provisions of Section 292 A of the Companies Act, was formed by the company.A balance sheet abstract and the company's general business profile, required under part IV of Schedule VI to the Companies Act, were not depicted in the note to accounts, the CAG has noted.
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