New Delhi: The Comptroller and Auditor General (CAG) said on January 30 that inventory assets of public sector undertakings (PSUs) had become a "vulnerable" area for disinvestment as these were not complete and not verified systematically.

"Inventory of assets is not complete and many times it is not verified systematically. The distinction between core and peripheral assets in relation to the going concern assumption is not clear. This is a particularly vulnerable area for PSUs slated for disinvestment," CAG V N Kaul said in New Delhi.

This comes at a time when the government is aggressively pursuing big-ticket disinvestment of PSUs like BPCL (Bharat Petroleum Corp Ltd), HPCL (Hindustan Petroleum Corp Ltd), Shipping Corporation of India and Hindustan Copper.

Addressing a seminar, organised by Institute of Chartered Accountants of India, he said amounts recoverable from the government and other PSUs were shown as "good" debts even after 10-15 years and sometimes upto 30 years.

Calling for a restructuring of Board of Directors of PSUs with an eye on the composition of audit committees, Kaul said the committees were "ineffective" in assessing the risks and in overseeing internal audit arrangement, exercising oversight on financial reporting and evaluating audit process.

"The absence of qualified independent directors in PSUs affects the formation of a truly effective audit committee," he said, adding that existing audit committees in most PSUs failed to provide meaningful guidance to internal auditors.

He said the arrangements for internal audit in most PSUs needed "improvement" as it formed part of finance division in many of them (PSUs) and in many cases the internal audit had lost sight of its main objective of ensuring internal controls to mitigate the enterprise-wide risks.

PTI