Cut back time lag between monetary outcomes and annual experiences: Sebi to CFOs, ETCFO
Mumbai, Markets regulator Sebi on Friday urged Chief Monetary Officers (CFOs) to cut back the time lag between the announcement of economic outcomes and the publication of full annual experiences, which is aimed toward enhancing buyers’ confidence.
Moreover, CFOs have been inspired to deepen their engagement with audit committees and auditors, making certain extra collaborative and accountable monetary disclosures, Sebi Complete Time Member Ananth Narayan stated at an occasion right here.
Aside from highlighting the important position CFOs play in upholding public belief, Narayan spoke about current tendencies in capital formation, the alternatives and dangers forward, and the significance of co-creating efficient rules to foster sustained capital progress.
“Presently, the hole between annual outcomes and full annual experiences ranges between 70-140 days. The complete report with notes to accounts, inside controls report, audit key issues, and CARO (Corporations Auditor’s Report Order) disclosures is vastly extra informative. Shortening this hole would considerably improve transparency for buyers,” he added.
On the ETCFO NextGen 2025 occasion on Friday, he pressured the necessity for CFOs to facilitate audit committees and auditors in shaping the audit plan for the 12 months and prompt that auditors ought to take part in audit committee conferences past simply discussing their particular gadgets.
This, he additional stated, would assist enhance belief and open extra channels of communication amongst stakeholders.
In line with Narayan, the position of the CFO has advanced dramatically from being a record-keeper to turning into a forward-looking worth architect.
“If you (CFO) log out on monetary statements, it isn’t a routine formality. It is a solemn promise that what’s introduced is a real and honest view of the enterprise’s monetary well being. That promise is the bedrock of capital markets. If that belief is damaged, the harm might be immense,” he added.
He pressured that CFOs should transcend mere compliance with accounting requirements and embrace their underlying rules, not simply the letter, however the spirit of the legislation.
Narayan identified the fast progress of India’s securities market ecosystem, which has expanded from 4.2 crore distinctive buyers in March 2020 to 13 crore at current. Mutual funds alone account for six crore distinctive buyers, practically triple the quantity from six years in the past. In FY 2024-25, mutual funds mobilised a report Rs 6 lakh crore in equity-oriented risk-seeking funds.
Additionally, FPIs held Rs 71 lakh crore in fairness property in India as of Could 2025.
On the identical time, he emphasised the significance of safeguarding investor belief. He cautioned in opposition to Kind I errors, resembling governance failures, tech breakdowns, fraud, and manipulation that may severely harm this belief. Equally, he warned of Kind II errors, the place extreme regulation would possibly stifle innovation and progress. As AI, automation, and energy-related technological shifts speed up, nurturing enterprise creation turns into extra important than ever.
Sadly, Narayan famous, there have been breaches of belief leading to Kind I errors. These embrace cases of funds being siphoned off from listed entities, sharp accounting practices round asset and funding valuations that mislead the general public, and insider buying and selling involving undisclosed info being exploited for private achieve on the expense of retail buyers.
He additionally cautioned in opposition to the pitfalls of over-regulation, which may result in Kind II errors and hamper real capital formation.
Narayan referred to as on CFOs and auditors to behave as lively companions in shaping honest and balanced guidelines. He identified that Sebi’s consultative processes, together with advisory committees, public consultations, and regulatory working teams, are designed to incorporate skilled enter, and prompt it is perhaps time for CFOs to formally organise their voices for illustration in these boards.
Elevating issues about present valuation practices, Narayan stated there’s a threat or not less than a notion of “valuation purchasing”, the place entities search out probably the most beneficial valuations.
“Simply as Credit score Ranking Businesses (CRAs) now disclose score histories and are held to requirements, it could be time for valuers to reveal assumptions, sensitivity ranges, and observe data, and be held accountable for egregious deviations,” he added. PTI
