NFRA Pitches Viability Assessment for Companies

New Delhi, Nov 25 (PTI) National Financial Reporting Authority (NFRA) Chairperson Nitin Gupta on Tuesday suggested that corporates should voluntarily adopt the concept of having viability assessment on a three to five-year horizon.

The suggestion comes against the backdrop of instances of many companies undergoing insolvency proceedings despite being assessed as 'Going Concern' over a short time horizon.

At a conference organised by industry body Assocham here, Gupta also emphasised the need to have self-regulatory measures based on global best practices, and one of the suggestions was to establish a board-level risk management committee separate from audit committees at companies.


Gupta said viability assessment has become more relevant with a large number of companies going into insolvency and bankruptcy resolution process during the last decade, despite many of them being 'Going Concern' on an assessment over a short time horizon of 12 months, according to a release issued by Assocham.

Like UK Corporate Governance Code requirements, Indian corporates should voluntarily adopt a new concept of 'viability' assessment considering a 3-5 year horizon, he was quoted as saying in the release.

Gupta also said the test of audit quality in the rear-view mirror would be how many corporate failures and restatements of financial statements have happened in the recent past.