The Institute of Chartered Accountants of India (ICAI) will not spare the auditors of Satyam Computer Services if they are found to be guilty. It could even debar them from the profession.
ICAI president Ved Jain said, “The disciplinary committee of the institute will lead the investigation and will ask for documents pertaining to Satyam’s accounts. We will enlist help from Sebi and the RBI and may even issue show cause notices to the ICAI members who were involved in the audit as well as those who were involved in accounting from Satyam’s end.”
Under Indian Penal Code any person party to a fraud or cheating can be convicted, he said.
Jain said a letter seeking immediate reply would be sent to PricewaterhouseCoop ers, the auditors of Satyam, tomorrow.
PwC has been silent on the issue so far. A statement issued by the auditor late in the evening simply stated, “We have learnt of the disclosure made by the chairman of Satyam Computer Services and are currently examining the contents of the statement. We are not commenting further on this subject due to issues of client confidentiality.”
The role of the auditors has come under sharp scrutiny, perhaps, even more than bankers and other employees of Satyam as promoter Ramalinga Raju’s disclosure said the practice of overstating profits had been going on for several years.
Kamlesh Vikamsey, a chartered accountant and former president of the ICAI, said, “The role of the auditor is to verify the figures, financial information and satisfy themselves. How did something like this cross the scrutiny of auditors for so many quarters?”
ICAI officials said audit mechanisms were already present to prevent such white-collar scams.
Apart from acting as an auditor of a company, a chartered accountant’s role has been expanded to look into the possibilities of fraudulent financial reporting and misappropriation of assets within a company, they said.
Others such as KPMG chief operating officer Richard Rekhi believed that Raju could not have carried out such a major fraud on his own. “These days you can doctor records and documents. How difficult is it to produce a duplicate computer record of anything. So one cannot ascertain whether the auditor is to blame or not without an investigation,” he said.
Rekhi questioned the role of banks and said, “How did the bank confirm Rs 5,000 crore in Satyam’s books? If the bank did not give such a confirmation, the auditors are to blame. In any case, this will come out in investigations and if it is indeed a negligence on the part of the auditors, it is a sad day for the profession.”
Keyoor Bakshi, president of the Institute of Company Secretaries of India, said: “Under company secretaries law if any member is found guilty his membership can be suspended.”
Private audit companies expressed their outrage and demanded a detailed investigation into every aspect of the scam.
“The size of the fraud is huge… auditors will be questioned; the matter cannot be wished away,” said Dolphy D’Souza, partner at Ernst & Young.
Meanwhile, Nasscom said it might cancel Satyam’s membership. “The entire incident came us a shock to us. We can even ban the company from Nasscom,” said Ganesh Natarajan, chairman of Nasscom.
