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Serious Fraud Investigation Office to deploy early warning system to detect frauds by corporate entities

A pre-proposal meet has been scheduled at Indian Institute of Corporate Affairs in Gurgaon. The SFIO is looking at a timeline of about a year-and-a half to complete the project.

, ET Bureau|
Updated: Apr 12, 2017, 11.47 AM IST
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Since it is an analytics product, we want to get a feel of what the industry expects before releasing the RFP, an SFIO official told ET.
Since it is an analytics product, we want to get a feel of what the industry expects before releasing the RFP, an SFIO official told ET.
The Serious Fraud Investigation Office (SFIO) is aiming to deploy an early warning system (EWS) by 2018 to facilitate advance detection of frauds by corporate entities. The SFIO will soon hold industry interactions to get feedback on the system and its working.

A pre-proposal meet has been scheduled for Thursday at Indian Institute of Corporate Affairs in Gurgaon. The SFIO is looking at a timeline of about a year-and-ahalf to complete the project, which has been in abeyance for the last four years.

"Since it is an analytics product, we want to get a feel of what the industry expects before releasing the RFP and incorporating the same in the RFP," an SFIO official told ET.

"The business modalities and framework has been finalised and we hope to see it (EWS) realised by 2018." This is the first concrete step towards the development of an early warning system to identify and detect financial frauds in the country after the parliamentary standing committee on finance criticised the government for procrastination in a May 2016 report.

"After a lapse of four years and even after the constitution of two steering committees on the subject, the ministry has failed to develop a fool-proof EWS," the parliamentary panel had said. The system will be a unique data-based interface, which will incorporate analysis of volumes of data available from the filings of registrar of companies and the databases of the ministry of corporate affairs.

"It is an analytics as well as data mining application, which enables detection of frauds at an early moment. The objective is to prevent high-profile frauds," the official said. "This system will be shared by other agencies and there will be also be an interface for citizens’ complaints integrated into this."


ET View
Better Corporate Governance
Adoption of an early warning system to detect frauds makes eminent sense. Whistle-blowers must also be encouraged and every company should guarantee protection to them. Swift action should be taken against an errant company. Corporate governance also calls for competent statutory auditors, rigorous internal audit, disclosures, strong independent directors and active shareholders.

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