Mauritius has joined the international trend in making accounts auditing more transparent for big companies. The Financial Reporting Bill has been voted in Parliament and it is now waiting for the president’s signature. The new regulations will apply to 600 public interest companies - any public, private or parastatal body that has a turnover of more than Rs 250 million annually.

With the huge financial scandals that have shaken the country’s economic stability and foreign investors’ confidence in its institutions, creating this legal framework to make companies and auditors accountable was a must. The final goal: restore the country’s credibility with foreign investors after scandals like those of the MCB-NPF and Air Mauritius.

According to Sushil Khushiram, minister of Industry and Financial services, “The law will make accountancy more transparent and auditing more efficient while strengthening standards of good governance.” The new law is attractive. The more so, as it will involve the setting up of new institutions to guarantee published accounts, supervise auditors, create an auto-regulatory body for chartered accountants and promote good governance in companies.

Hence, the creations of a Financial Reporting Council (FRC) has been proposed. It will have to ensure that companies quoted on the Stock Exchange respect international accountancy and auditing norms. If the FRC discovers any anomaly in a firm’s published accounts, it can ask the firm to rectify them. If the company refuses, it will be liable for a Rs 1 million fine. Moreover, the FRC can submit the case to the appropriate regulatory body – the bank of Mauritius or the Financial Services Commission or the Registrar of companies. The latter will decide if the case will go to the police or not.

Auditors will also be under high surveillance. The FRC will deliver operating licences to auditors. Moreover, they will re-audit the accounts after the auditors to avoid any problem. The government sees in the FRC a effective way of introducing good governance in companies. Henceforth, companies concerned will have to include a chapter on good governance practices in their annual report. They will not be forced to apply them but they will have to justify why they choose not to follow them.

Although the author of the bill is adamant that institutions under the new law will be totally independent from the government, opposition MP Xavier-Luc Duval has expressed fears that the FRC would be under the influence of the government. He said that the government should not itself appoint the Council’s members.