Every financial scandal leads to intense debate on how to improve the existing mechanisms for providing better safeguards. The Sarbanes Oxley Act, Clause 49, Kings Report and various insider-trading rules are all the direct result of major economic debacles. Its safe to assume the underlying causes of the current global credit crisis or the chinks exposed by the Madoff fraud will result in more changes or review of existing regulations. The turmoil in India, caused by events at Satyam, certainly warrants a systemic review of all components of the economic and corporate system. However, if legislation is brought about as a reaction to a specific debacle or even the regulators need to be seen to be acting, it will create sub-optimal solutions. Regulations need to be defined in consultation with a large group of stakeholders so that it facilitates business operations and helps in the growth of a robust economy.
Since Indian GAAP allows qualifications to an audit report, it is not uncom