| Shri Nagarajan joined the Indian Audit and Accounts Service in 1989. His expertise is in Audit Information Technology. He has undergone IT Audit Training in NAO-UK and has imparted training to the officers in SAI-Mauritius. He has also conducted audit of IT Services Division of UN Headquarters at New York. |
The Government of India announced a slew of privatization, the important ones being sale of 25% of stake in Videsh Sanchar Nigam Limited (VSNL) to Tata group. The sale of this companies shares and some other companies in oil 3sector and in hotel industry shall bring the government’s privatization receipts for the fiscal year ending march 2002 about Rs 31 billion about one fourth of total estimated for this year (Rs 120 billion).
Though the government could not garner the estimated Rs 120 billion the amount of Rs 31 billion is also not a small amount to be ignored. The moot point is how the money is utilized many tend to think about the process of privatization as such, with the hope in mind that this may help in efficient administration, distribution and development. However, very few think how this proceeds can be put to use.
The basic objective of the audit of any sale process is to ensure that the process followed is consistent with the requirements with the requirements of public accountability, that the interest of tax payers have been adequately safeguarded and that the best value for money has been obtained. All other aspects of the process are to be examined with these objectives.
First phase to be examined by the auditors is that of preparation for sale. Auditor should review the steps taken to ensure that the entity to be sold has been fully defined, that the clear objectives have been set for sale, time of sale has been decided considering the factors like share market in mind. It should be seen whether fair procedures have been adopted in conduct of sale. It must be ensured that adequate steps have been taken to establish that the proposed sale is based on an evaluation of full cost and benefits.
Next phase of audit relates to conduct of sale itself. This phase should cover a number of well defined steps. It should ensure that all potential buyers have been identified, that the number of buyers are short listed on the basis of initial bids. Finally auditor should ensure that the formal offers have been properly evaluated to select the final buyer.
It is clear from the above discussion that an efficient sale process must achieve the objective of sale, while striking the balance between decision making and accountability. It should also achieve the correct blending of political decisions and expert inputs. It must be consistent with the laid down policies. Documentation should be clear and make the transactions amenable to public scrutiny with openness and transparency in each stage.
In order to ensure the cause of efficient and effective utilization of fund and management of it shall help in ensuring the best value for money has been obtained and the interest of tax payers has been adequately safeguarded.
(Views expressed in this article are of the author and not that of Government of India).