The Indian accounting sector regulator wants the government to bring in a provision to bar tainted firms from taking up any new assignments for a specific period. The move by the Institute of Chartered Accountants of India (ICAI) is the latest in its undeclared but continuing tiff with the Big Four foreign accounting and audit firms that has escalated after the Satyam fraud. ICAI president Amarjit Chopra told FE that RBI, Sebi and the CAG should specify norms “barring such auditing firms for a particular time period whose partner has been found guilty in last three years.”

In 2009, S Gopalakrishnan and Srinivas Talluri, partners in Price Waterhouse, the statutory auditors for the scam-hit Satyam Computers, were imprisoned for alleged audit misconduct. The disciplinary committee of ICAI has also held Gopalakrishnan guilty of professional misconduct in the audit of erstwhile Global Trust Bank. Price Waterhouse is a related entity of PricewaterhouseCoopers, the global audit and accounting firm.

Chopra said, “At present, if a partner of a firm is held responsible in any fraud, the firm disassociates itself (from the partner) and later takes him as a consultant.”

This, Chopra said, “does not discourage auditors from professional misconduct.” Chopra further said the institute now has the power to take action only against the auditor and not the firm. But the institute is of the view that any of the auditors who ceases to be a partner of the firm and has been charged under disciplinary proceedings should not be allowed to undertake fresh work and therefore impose responsibility as if their status as a partner is still continuing. Chopra said they will also be discussing the concept of rotation of auditors in their next council meeting. Currently, only public sector banks are required to rotate auditors, appointed from among RBI-empaneled list of audit firms, but there is no compulsion on private banks and insurance companies to follow the practice.

ICAI has also requested the ministry of corporate affairs that the periodicity of rotation for an audit partner should be once in every three years, while for an audit firm it should be once every six years. At present, there is no such tab on the rotation of audit partner or audit firm under the Companies Act, 1956. Minister Salman Khurshid has recently told he preferred a rotation among the audit firms but without compromising on the development of domain knowledge by them.

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6 Comments

  1. Ranjit Sen says:

    Don’t make a fool of yourself CA Subhash Chandra Poddar. Whoever you are, your comments reflect that you are an absolute nonsense. God knows how you passed CA. The Institute needs to shake up. What else do you expect if such rotten elements like these are members?

  2. CA.Subhash Chandra Podder says:

    ICAI have already banned lifetime Syatam Auditors on 13/02/2013 by the New President CA Jay deep Narendra Shah, vice president CA subodh Kumar Agarwal and council colleagues as recommended by the disciplinary committee of ICAI
    Well done.
    CA Subhash Chandra Podder
    Kolkata
    17/02/2012

  3. CA. Subhash Chandra Podder says:

    Why only the question of four big firms ? Now a days most of the Chartered Accountants are guilty for their negligent of obligations to the stake holders . After all they are CA s. No need to update their knowledge . who cares they can bark , why they did not get audit and other assignments ? what is doing the Institute of Chartered Accountants of India for them ? Hence , they have the immoral right of perform the duties dishonestly. The Institute is trying their level best to cautious their members in different forum , seminar , conferences, even through the Chartered Accountants Journals. Besides this there are several web sites to get them self updated . Who cares for that . Those who are dishonest it is difficult to make themselves honest. It is my experience in 42 years in continuous practice in this profession.
    CA. subhash Chandra Podder
    14/12/2011

  4. Rajesh says:

    I agree with Mr. A.Banerjee, that we should not wait for any misdeed to happen and then taking preventive steps, instead of that, proactive approach is required. This Satyam case is really a shameful event in Indian industry. And if this can happen under the nose of so called BIG firm, how much reliability the investors can place on others.

  5. A.BANERJEE, IRS (Retd.) says:

    The knowledgeable and informed public would like to know as to what was the Institute doing over the years, at least after when a few people like the famous Mr. S.Gurumurthy and others waged a war against the entry of these foreign entities to the inevitable detriment of the Indian firms (of 2-5 partners in particular. As far as one can recall, excepting the formality of offering lip sympathies, not one past President has ever even publicly or tacitly bothered about this and one of them even joined such an entity himself!
    The other equally important question relates to the role of the CAG in this entire suggestive and murky matter [as the CAG is the supreme authority to oversee the entire discipline of audit and also the sole provider of income to the CA firms by way of award of audits of PSUs]. We do not recall having ever read any news about any concern expressed by any CAG so far, though that is understandable this post has now become reserved for the IAS alone.
    But the people’s doubts deserve clarification.

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