The Comptroller and Auditor General said on Thursday that inventory assets of public sector undertakings had become a "vulnerable" area for divestment as these were not complete and 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 divestment," V N Kaul of CAG said in New Delhi.
This comes at a time when the government is aggressively pursuing big-ticket divestment of PSUs like Bharat Petroleum Corporation and Hindustan Petroleum Corporation, Shipping Corporation of India and Hindustan Copper.
Addressing a seminar, organised by the Institute of Chartered Accoutants of India, he said amounts recoverable from the government and other PSUs were shown as "good" debts even after 10-15 years and sometimes up to 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 committees," 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 the finance division in many of them and in many cases the internal audit had lost sight of its main objective of ensuring internal controls to mitigate the enterprise-wide risks.
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