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Mr Pratip Kar, Executive Director, SEBI, Mr N.R. Narayana Murthy, Chairman and Chief Mentor, Infosys, and Dr Omkar Goswami, Chief Economist, Confederation of Indian Industry, at the Fourth Asian Roundtable on Corporate Governance in Mumbai on Monday.

MUMBAI, Nov. 11

AUDITORS should be held accountable to a company's board of directors and not the management, said Mr N.R. Narayana Murthy, Chairman and Chief Mentor, Infosys, while stressing the need for independence of auditors in his address on corporate governance at the Fourth Asian Roundtable on Corporate Governance held here on Monday.

Calling his 15-minute talk - `Corporate governance musings of a practitioner' - he stressed the need to articulate desired behaviour that you expect from the company's management as a step towards establishing good corporate governance practice in an organisation.

"And then, we need to institutionalise such desired behaviour and as a community (shareholders, etc), we should define what is that we are willing to do in order to set a certain standard of corporate governance in the company," he said.

"When I say `articulating best practices', it touches aspects such as the ability of the management to put the community/shareholders' interest before its personal interest; to ensure that there is a high level of transparency, accountability for every action of top management and alignment of actions of senior management to the long-term orientation of the company," he said.

Touching upon the independence of auditors and accounting standards, he said, "While a lot has been said about accounting standards, I will add that the essentials that need to be given importance here are issues such as related-party transactions, simple and easy presentation of the same, as well as making known the prospects, challenges and risks associated with the business."

For board of directors, Mr Narayana Murthy said there should be a clear definition of their functions, responsibilities, rights and compensation. "Besides, you need to define the independence of directors."

He also suggested the establishment of an academy on corporate governance that would, for example, train directors in areas relating to accounting standards followed by different countries, etc.

"Apart from this, each company should hold a two-day training session for directors (like we do at Infosys) which should cover various aspects of the company's business, the industry it operates in, its business model and risk associated with the business among other areas," Mr Narayana Murthy said.

"Another good practice to adopt is to provide independent directors a forum to meet in the absence of any management personnel every quarter to discuss the company's progress."

For deciding a CEO's compensation, he said there is a need for fairness, accountability and transparency.

"CEOs also need to take a long-term view of benefits so that their goals will be aligned with the company's goal."

"We need to make respectability fashionable again. Though ultimately, no laws can force us to be good citizens, it has to come from within," said Mr Narayana Murthy.

Infosys rating in a month

INFOSYS is expected to get corporate governance rating from Standard & Poor (S&P), the global rating agency, in a month's time, according to Mr Narayana Murthy, Chairman and Chief Mentor, Infosys Technologies.

Responding to a query on corporate governance ratings during the Fourth Asian Roundtable on Corporate Governance, Mr Narayana Murthy said that such ratings do help to a certain extent in as much as it allows you to compare your company with others.

"We have also gone in for a corporate governance rating and had asked S&P to conduct an audit for the same. We are expecting the results in about a month's time," he said.

He added that the rating would cover parameters such as the quality of the company's board, its role in the strategy of the organisation among other aspects.

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