More than 200 listed Indian mpanies have discrepancies in their annual audited financial results. Some of the errors are serious, like for this mpany whose reserves in the balance sheet show a whopping Rs 2.16 billion discrepancy.

These findings have been thrown up in a study of the financials of the past 5 years of more than 1,400 listed Indian mpanies. The research project was carried out by the analysts at myiris.m, India`s leading financial portal, as a service to investors. The study, which is being carried out in phases, has so far vered only mpanies in manufacturing and services. Banks and financial services mpanies will be vered in the next round.

``For all of the mpanies, one or more of the numbers simply do not add up. If you add up the numbers in the schles under one head, this mputed value should tally with the total reported for the rresponding item in the main balance sheet or the P&L statement as the case may be. We find that for these 209 mpanies, they don`t add up,`` explains S. Swaminathan, Founder & CEO of myiris.m, whose analysts carried out the research project.

``It does not matter whether the quantum of discrepancies are material. The very fact that there are discrepancies is a serious enough matter warranting further examination to prevent such ourrences in the future,`` Swaminathan elaborates. ``We will pass on the findings of the study to the Ministry of rporate Affairs, SEBI, and the stock exchanges,`` he said while refusing to disclose the names of the mpanies to the public ``as it might have unintended nsequences.``

Swaminathan refuses to describe this as fraudulent reporting. ``I would say that the mpanies and auditors should have paid more attention. But while I agree that there uld be the odd case where some mpanies may have fudged their acunts deliberately, I would not pin the fraud label on all of them,`` he said. ``In fact, we are ntacting each mpany individually to point out the problems to them which they may rectify if they so desire,`` he said, arguing that that would be the nstructive way forward.

Outlining the approach adopted by his team, Swaminathan said that the errors were disvered in the urse of creating India`s first ever rporate fundamentals database in XBRL. ``You nvert the entire data set into XBRL and you will see all these red flags immediately``, he added. The project used the taxonomy approved recently by the Institute of Chartered Acuntants as a first step towards full fledged adoption of XBRL in India.

Swaminathan believed that it would be unfair to simply blame the auditors, as it is the responsibility of mpany managements to get it right. ``In fact, we wish to mpliment the Institute of Chartered Acuntants for introducing XBRL in India, that alone would have thrown up every one of these cases of misreporting which the auditors uld have then caught and rrected,`` he added.

While declining to name the errant mpanies, Swaminathan shared the key findings of the study. Acrding to the findings:

>> 60% of the mpanies are listed on both the NSE and BSE, 1% on the NSE alone and the rest on the BSE alone.

>> In terms of sectoral dispersion, the research found that textiles with 27 mpanies acunted for the most followed by IT (18), Steel (10) and Pharmaceuticals (9).

>> In terms of geographical dispersion, Maharashtra with 60 mpanies acunted for the most, followed by Delhi at a distant send with 29 mpanies. Tamil Nadu (22), Andhra (22) and Gujarat (19) followed.

>> 109 mpanies had errors in the balance sheet, 66 in their cash flow statements while 34 had errors creeping into their Profit & Loss Statements.

XBRL, or eXtensible Business Reporting Language, is often described as the barde of information and has been acknowledged as the harbinger of transparency in financial reporting worldwide. More than 100 untries have adopted XBRL, this includes India. RBI, SEBI and the two stock exchanges are championing the adoption of XBRL in India, with the ICAI providing leadership.

All Indian mpanies with ADRs outstanding have to file with the Securities Exchange mmission of the USA in XBRL starting next year. In fact, Infosys has been part of the voluntary mpliance program of the SEC for the last 3 years and Mohandas Pai is a recent addition to the board of XBRL International.

``I must state unequivocally that the purpose of introduction of XBRL is not to catch errant mpanies. In fact, with XBRL, mpanies will not make errors in their reporting if they are able to implement XBRL within the anization effectively,`` Swaminathan says. ``I want to tell mpanies that it improves the auracy and quality of your own financial information in the marketplace,`` says Liv Watson, Vice Chair of XBRL International, and one of the originators of the XBRL ncept, describing the introduction of XBRL as the greatest thing that has happened for investors in a long time.

Citing examples from other untries, she pointed out that in Spain, the incremental NPA of the banking system dropped to less than 1%, ntributing to the health of the banking system.