House panel seeks govt views on mandatory CSR

House panel seeks govt views on mandatory CSR
Mon Apr 23, 2012 4:25 am (PDT)
House panel seeks govt views on mandatory CSR Asks govt to clarify role of internal auditors, in the backdrop of Satyam scam Deliberating on the Companies Bill, a Parliamentary panel on Friday asked the government for its views on making corporate social responsibility (CSR) mandatory at two per cent of net profit for all companies above a threshold, which was suggested by it earlier but rejected by the Government in the revised Bill. In the context of the Satyam scam, members of the Standing Committee on Finance also sought a reply from the government on the responsibility of internal auditors if the company gets involved in a scam. During the course of on Friday's meeting, the Standing Committee members raised several questions and sought the government's reply so that the report could be finalised in a couple of more meetings. Most of the members are of the view the final report should be given in the Budget session, slated to resume on April 24. "The role and independence of auditors was a crucial question raised in the meeting. Since auditors will be decided by the company and its chairman, it is important that they remain independent so that there is no other Satyam-like scam," said those in the know of development.
This is the second time the Standing Committee is examining the Companies Bill, 2009. It gave a report in the 2010 monsoon session. When the government brought the Bill in Parliament, Opposition parties said there were 22 changes which again needed to be sent to the committee. The government had incorporated 157 of the 178 amendments. Members feel CSR should be made mandatory, as public sector companies are already giving five per cent CSR on the total profit, while it is not known what private companies were doing. Interestingly, the committee in its report in August 2010, had recommended two per cent CSR but the government had diluted it. The revised Bill proposes the companies should take a call on CSR, but must give reasons in its accounts if it is not implementing these social obligations. The members also asked the Ministry of Corporate Affairs to explain how the government would ensure labour laws were not violated by companies taking money from banks. "The companies must not be allowed to violate labour laws since they use funds from banks, which are public money. The government should ensure labour laws are not violated," said those following the development closely.
URL: http://www.business-standard.com/india/news/house-panel-seeks-govt-viewsmandatory-csr/472146/