The trade group representing institutional investors urges Securities and Exchange Commission not to weaken plans to make auditors publicly accountable for their work
An industry group, which represents some of the US' largest investors is urging regulators not to back away from plans to require auditors to sign the financial statements they prepare for companies.
In my 13th August "Trade" column, I wrote of a struggle between the Public Company Accounting Oversight Board (PCAOB), which regulates the accounting industry, and the Securities and Exchange Commission over reforms to auditor disclosure. The PCAOB, and many accounting reformers and investment groups had pushed for this change.
The accounting industry and the SEC have resisted. The negotiations have been going on for years.
In a letter dated 15th August, Jeff Mahoney, the general counsel for the Council of Institutional Investors, a non-profit that represents investment organizations with more than $3 trillion in assets under management, wrote, "to express our surprise and disappointment in the report earlier this week in the New York Times that the Public Company Accounting Oversight Board has decided to dramatically weaken" the reforms.
The bodies are coming to a compromise, with final rules slated to come out next month. As part of the compromise, the accounting firms will be required to disclose who the lead audit partner is, but the partner will not be required to sign the audited financial statements, according to a person familiar with the decision. It's not yet decided in what manner the auditing firms will disclose the lead engagement partner's name.
The Supreme Court declared that all coal mining rights between 1992 and 2008 were assigned illegally by the government in a process that lacked transparency in the absence of a competitive bidding system or auction
The Supreme Court on Monday has said all coal block allocations since 1993 till 2010 before pre-auction era have been done in an illegal manner. However, the apex court said, further hearing is required to determine whether there is a need for cancelling 218 coal block allocations.
A Bench headed by Chief Justice RM Lodha said, the coal block allocation done by screening committee was not fair and transparent. "All allocations were done in illegal manner and suffers from vice of arbitrariness. No objective criteria was followed and guidelines were breached in coal block allocations," the Bench said.
The Supreme Court examined alleged irregularities in the allocation of about 194 coal blocks in Jharkhand, Chattisgarh, Maharashtra, West Bengal, Odisha and Madhya Pradesh to private companies and parties during 2004 to March 2011.
The Court said it would appoint a high-level committee of retired judges to identify those who will be affected by its order. The Bench also said it will address the issue of the legal consequences of its ruling on 1 September 2014, when it creates a committee to identify those whose allocations will be cancelled.
Earlier, the Comptroller and Auditor General (CAG) report submitted in the Parliament in August 2012, has stated that there had been an estimated loss of Rs1.86 lakh crore due to coal block allocation without auction from 2005 to 2009.
Neither the RBI nor the SEBI was interested in regulating deposits collected by jewellers. Now, new Rules under the Companies Act 2013, are forcing corporate jewellers to stop such schemes
Reliance Retail Ltd said it has decided to discontinue its 'Golden Steps Jewellery Purchase Scheme' and 'Diamond Dream Jewellery Purchase Scheme' with immediate effect. The company will not accept fresh or further subscription or instalments for these schemes, Reliance Retail said in an advertisement.
"Subscribers to the jewellery purchase schemes are requested to visit the Reliance Jewels store where they have opened their account, along with their ID proof, address proof and Scheme related documents in original, for redemption and closure of accounts with jewellery purchases before 31 October 2014," the advertisement reads.
Under Rule 3(6) of Companies (Acceptance of Deposits) Rules, 2014, no company can accept deposit, which carries a rate of interest more than what has been prescribed by Reserve Bank of India (RBI) for deposit accepting non-banking financial companies (NBFCs).
In other words, jewellers' gold savings schemes needs to be on par with public-deposit schemes. The Rules limit the return companies can offer to deposit holders to 12% and caps the total amount of deposits to 25% of their net-worth.
The way to comply with new Rules is to return the deposits to the public before 1 April 2015. If not, they will be penalised in accordance with the provisions of the Act. It means small or big jewellers will have to comply. But, will it cause trouble for small jewellers, especially if the size of deposits is huge when compared to its own net-worth? Have the jewellers kept the deposited money in safe instruments like bank fixed-deposits (FD) or in risky avenues? Moreover, have they really kept it aside or have they been using it for business operations, which can make the refunds to everyone virtually impossible?
Moneylife had written in mid February 2014 about jeweller gold savings scheme coming under the Securities and Exchange Board of India (SEBI) scanner. But SEBI is yet to wake up to thousands of crores invested by consumers in gold savings schemes of jewellers which can easily qualify as collective investment schemes. SEBI and RBI had replied to an Right to Information (RTI) application stating that such schemes are not regulated by them at all.
Moneylife had done a survey last year for our cover story on gold. Almost half of the respondents were aware of jewellery gold savings schemes offered by jewellers such as Tanishq, but surprisingly only 15%would invest in such schemes and it was more for ease of payment rather than for better returns or tax savings.
The new Rules may not apply to 'Gold Deposit Schemes' (GDS). A gold savings scheme is the opposite of GDS, which is offered by banks like SBI and registered NBFC. GDS from jewellers is unregulated. Under GDS, you give your gold to get a higher quantity of gold at the end of one year, or get monthly payment as well as return of your gold at end of the term. The interest rate for SBI GDS three-year deposit is 0.75%, for four and five years it is 1%. It’s not great, but it is calculated in gold terms. Jewellers offer a high rate of interest of 7.5%, but there is absolutely no safety.