A HIGH-POWERED panel of the Institute of Chartered Accountants of India (ICAI) — the nodal body in India for auditors — has prima facie found two former auditors of Satyam Computer and members of the software company’s internal audit cell guilty of professional misconduct and failure in carrying out their duties.
The institute’s five-member disciplinary committee agreed with the findings of the director discipline, ICAI, which found these people guilty. The findings were placed before the institute’s disciplinary committee on September 23. The committee also found Price Waterhouse-Kolkata and Price Waterhouse-New Delhi prima facie guilty of professional misconduct. PW was the audit firm for Satyam. The institute will issue notices to all the respondents on Tuesday and seek written replies within 30 days.
Mr Agarwal is also a member of the disciplinary committee. The prima facie guilty are: S Gopalakrishnan, Srinivas Talluri (former auditors of Satyam), head of audit team P Sivapasad, audit team member Ch Ravindranath, Satyam internal audit cell (head) VS Prabhakara Rao and Satyam chief financial officer V Srinivasu.
Efforts to get a formal response from PW proved futile.
However, according to PW officials, the institute has so far not asked for any documents from the audit firm, in matters related to the case, and has also not spent time speaking to the two partners of PW to investigate their alleged role in the fraud. “The two partners have been behind bars ever since the Satyam chairman and CFO were arrested on January 9,” said one official with direct knowledge of the development.
ICAI has been carrying out an independent investigation into the role of the auditors in the over Rs 7,000-crore fraud at Satyam, then India’s third-largest software. The fraud came to light after an admission by former chairman B Ramalinga Raju who in a statement sent to the stock exchanges and markets regulator Sebi, said he had falsified the accounts of Satyam. Mr Raju, the two auditors from PW and the CFO are currently under judicial custody.
A parallel investigation is also being carried out by the Serious Fraud Investigation Office.
The disciplinary committee of ICAI will proceed against the respondents, as per the procedure laid down in Chapter V of Rule 18 of the Chartered Accountants (Procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rule, 2007.
