A YEAR after the Satyam scandal, the accounting regulatory body, the Institute of Chartered Accountants of India (ICAI), has recommended setting up of a whistleblower system within all audit firms.
The decision follows revelation in the investigation of Satyam scam instances when auditors were denied access to proper financial records by their client firm. A whistleblower system entails establishing a mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud or violations, directly to the management of the company.
“This will bring ICAI on a direct information chain about the discrepancies as and when they take place. Also, we would be able to take prompt action, if any manipulative practices are followed by companies,” said an ICAI official requesting anonymity.
If the new system is put in place, ICAI will get access to malpractice that emerge during the audit process. The ICAI’s high powered committee on Satyam fraud case found that members of the audit team of the erstwhile Satyam did not have full access to Oracle Financials and they were only given `view and read only’ access.
your collation of information is not explicit on ICAI recommendation of setting up of a whistleblower system within all audit firms
how to setup please advise .
pk chopra and company
Hello all CAs the headline and the details given in the news is little confusing.
1. We are talking about a whistle blower with in the Audit firm and
2. The news states like this ”
A whistleblower system entails establishing a mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud or violations, directly to the management of the company”.
I donot understand how this will bring ICAI on a direct information chain. Because it talks about something to be done by the company (not audit firm) and reporting to the management which is again ( not the audit firm).
And how is this linked to Satyam since the above method will surely fail in satyam case since management and the audit partners put together did the same and reporting to them is totally useless.
In my view ” THE WHISTLE BLOWER” system is definitely required but not by appointment or designation. ICAI should encourage all CA Firms and Students to be whistle Blowers. A separate Cell should operate with contact details well advertised. The Special Cell should analyze each e-mail and communication and deal confidentially with the informer. Fat but one time reward should be given to the informer for the information (on confirmation of fraud). This reward money should be colleted from the defrauding company as penalty by appropriate agencies.
Further To ensure that the ICAI cell members are not corrupted, there should be proper control over the officers.
I am sure many CAs will leave all other job and do only investigation. This will ensure a general level of fear in to the CAs involved in the wrong practices, since they will not be knowing who is the informer.
Dear all concerned
There are lot of balance sheets and profit and loss account, signed by some statutary auditors, where even the figures in the balance sheets are not tallied . The p and l shows a profit and ther audit report states as loss and vice versa. In many cases, the sch vi , requirements and other mandatory disclosures are not avaiable in many audited reports and statments etc. There are even lots of errors in the last year figures as given now and as stated in the last year audited statements etc. Who will bell the cat. In some cases, the audit report even states for an another company name in the statement where as the statments are related and signed for entirely for an another company. Even the dates of audit report and also the dates given in the balance sheet etc are differs. Who will blow whistle to whom , if so, what will happen to the blower. Who will pay the salary or his remuneration etc or even safe guard his own life . how is the whistle going to work . any body is there to tell
If CA himself happen to be Fraud ,then no rules can help
I APPRECIATE THE INITIATIVE TAKEN BY OUR ESTEEM INSTITUTE ( THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. IN MY OPINION ,ALL THE MEMBERS OF THE INSTITUTE MUST APPRECIATE THIS WHISTLE BLOWER SYSTEM WITH IN ALL AUDIT FIRMS.
VERY GOOD INITIATIVE TAKEN BY OUR ESTEEM INSTITUTE ( THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA ), WELL DONE ,WELL MOVE, MUST BE APPRECIATED BY ALL THE MEMBER OF CA PARIVAR.
the word remunderation should read as remuneration. Thanks
ICAI must ensure protection and safety with fat remunderation for the whistleblower before intoducing such practice. It will always be much easier for the company to pinpoint fingure on the person who has had acted as a whistleblower, and will have to face the consequenes arising from such whistle blowing.