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Sebi to pay first year peer review auditing fee

May, 15th 2009
The Securities and Exchange Board of India (Sebi) today said it will pay the first year fees to auditors who will undertake peer review of accounts of the Sensex index tracker companies, a concept which was introduced to prevent recurrance of Satyam like frauds. Sebi will pay peer auditors fees for the first year and then we will review how this exercise will be funded. It seemed there is a conflict of interest if the companies pay for the peer review fees. So, we decided to pay to complete the process, Sebi chairman C.B. Bhave said. As a confidence building measure following disclosure of accounting fraud in Satyam, the market regulator introduced peer review of the accounts of companies which figure in the list of 50 NSE nifty and 30 BSE sensex companies. Bhave said that the regulator has received reports of several peer reviews of index tracker companies but declined to state the number. Bhave accepted there had been some delays in selection of auditors by Sebi after verifying the conflict of interest with the concerned company. He denied that there was any deadline for such peer review, but the process was taking longer than anticipated. Bhave stated that he had heard of certain issues concerning peer review concept and wished to complete this process before it goes for a review. Reacting on buyback of shares, Sebi said that the regulator was aware of certain issues relating to announcement of open offers and deviation from actual action by the companies. There are difficulties in bringing changes in norms of buyback from the existing regulations and we are having a relook at the regulations, Bhave said. Commenting on the SME exchange, Bhave said that they have received applications expressing interest but they and the applicants are bothered on some issues to ensure that this attempt does not fail like a few in the past. Asked about new derivative products, Bhave said that final report by the committee is under preparation and the final decision would be taken by the joint committee of Sebi and RBI. The joint committee will review currency future and need for other products. The existing dollar-rupee currency future is not even one year and they need time to move step by step, Bhave said.