Don't treat forensic accounting as a post-fraud tool, spot anomalies early: Sebi chief Tuhin Kanta Pandey to CAs
Aug 1, 2025
Sebi chief Tuhin Kanta Pandey on Friday urged chartered accountants to develop the ability to detect anomalies early on, making it clear that forensic accounting should not be treated as a post-fraud tool only.
Addressing an ICAI event here, Pandey said the "collective ability" to anticipate risks and early detection of anomalies will determine the future of financial governance.
"Forensic accounting should not be treated as a post-fraud tool only. Rather, it needs to evolve into a proactive discipline embedded within the structure of corporate controls," he added.
He said the capital markets regulator has "consistently demonstrated" its commitment to strengthening market integrity, enhancing disclosure standards and using technology to uncover complex financial frauds, but added that regulations alone are not enough in this aspect.
There is a need for the regulator's efforts to be supported by collective wisdom and coordination of all stakeholders, he said, adding that the competence, vigilance and professional integrity are very important aspects to tackle fraud.
Pandey said Sebi is all set to launch an aggressive systemic campaign against frauds soon, pointing out that it is already undertaking some efforts, along with market infrastructure institutions.
It is necessary to protect the system from fraud because investors' growing appetite in the market is driven by the transparency and the governance standards, Pandey said.
He added that frauds have a "tremendous" negative impact on the securities market once they come to light and asked all the stakeholders to introspect on what is best for the markets while undertaking any actions.
Technology can play an important part in spotting fraud, he said, adding that Sebi has also developed supervisory technology of its own, which is being used by stock exchanges.
A technological tool can determine fraudulent patterns, but it will take a human mind to contextualise it and expose fraud, he added.
[The Economic Times]
