KOCHI, November 16: The reported decision of the Registrar of Companies (RoC) in Kerala to initiate action against state public sector undertakings (PSU) chiefs for delay in publishing the audited financial results has been long overdue according to analysts here. So far no action was taken against public sector chiefs despite the fact that many of the PSUs had auditing backlog ranging from one to 10 years. At the same time, the RoC had initiated court proceedings against private sector unit chiefs for delay in finalising accounts as per the Company Law.

The problem of backlog in publishing audited financial results by state PSUs was not a problem unique to Kerala. A study done by a high powered committee appointed by Comptroller and Auditor General (CAG) in 1992 to review the response of state governments to audit reports of CAG had shown that Uttar Pradesh state PSU's had the worst score in this regard. The Committee headed by SL Shakder, former Secretary General to Lok Sabha and chief election commissioner pointed out in its report submitted in March 1993 that 98 PSUs had backlog ranging from 1 to 11 years and the number of accounts involved was 515 while Bihar had 56 PSUs having backlogs from one to 14 years and the number of accounts involved was 410. In Punjab, 63 corporations were involved with arrears ranging from one to 13 years. In comparison, 85 Kerala state PSUs had backlogs ranging from one to 15 years and the number of accounts involved was 299. The CAG had appointed the Committee as the response of state governments to CAG's audit reports was delayed or inadequate while the Union government's response was satisfactory in this regard. The terms of reference of the committee included the state governments and their public enterprises response to the CAG's audit reports and to the recommendations of the public account committees and committee on public undertakings in the context of audit reports.

The latest report of Bureau of Public Enterprises reveals that there has been no progress in submission of audited accounts even four years. Of the 110 PSUs in the State, 64 had backlog in audit of accounts and in the case of five companies, no information was available.

The ruling Left Democratic Front government (LDF) had announced in the Assembly a year back that strict action will be taken against erring PSU chiefs. As a follow up, the state chief secretary in June last had also given two months to PSU chiefs to clear the backlog and had also given permission to hire chartered accountants for the purpose.

The recent decision by the RoC to prosecute PSU chiefs follows the poor response from PSU chiefs even after repeated reminders. The RoC can prosecute under sections 159, 166, 210 and 220 of Companies Act 1956. The chiefs could also be made to pay fine for delayed filing of audited reports. For Form No 5, the penalty for delayed filing is 2 percent per month on filing fee and for other documents, it ranges from two times filing fees for delay up to three months to nine times the filing fees for a period of delay beyond two years.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.