Segmentation and consolidation of accounts by corporates had been recommended by the CB Bhave Committee on continuous disclosures. The SEBI board had cleared quarterly disclosures of results and disclosure of all material information to stock exchanges, but was undecided on segmentation and consolidation of accounts at that time due to the need to outline certain accounting standards and norms for the same. The market regulator set up a committee under noted chartered accountant YH Malegham to work out the modalities to this effect.

The Bhave Committee had said that consolidation of accounts of subsidiary and group companiesenables the market to take an integrated view of the operations of companies under the same management. On segment reporting of accounts, the committee had noted that the practice of segmenting the accounts of a company and reporting them largely on the basis of different areas of operation (industry segments) as also business in different countries is prevalent in developed markets and should be adopted in investor interest here as well.

With Mehta deciding to put a renewed thrust on corporate governance, it has now been decided to adopt the remaining part of the disclosure committee report.

"Segmentation and consolidation of accounts is next on the cards. The Malegam Committee is more or less through with its recommendations. Since Malegam is also on the corporate governance committee we would dicuss the issue on the broader forum as well and then issue a directive," Mehta told The Financial Express.

Mehta said that even though the committee on corporate governance has been asked to submit its reportin three months, SEBI would not wait for all the recommendations to come through before taking steps.

"If we find that there is a certain suggestion made to us during discussions, which is acceptable, we will introduce the measure without waiting for the report to be finalised. Corporate governance is on top of our agenda now," said Mehta.

"Disclosure norms are very stringent in international markets and it is our endeavour to ensure that the Indian investors do not lose out," said Mehta.

INSIGHT
On expected lines

Segment-wise reporting and consolidation of accounts being made mandatory by SEBI for the listed companies was expected. SEBI is a member of Iosco and is responsible for introducing cash-flow statements. Though ICAI had a standard on the subject (AS-3), it is still not mandatory. SEBI should take the matter to its logical end and make deferred tax accounting mandatory for listed companies. Till now, ICAI has always taken a view that there is no point in framing standards foreither of the above mentioned issues as these disclosures are not required by law. Hopefully, with SEBI putting its foot down, ICAI will be ready with the standards in time.