The Institute of Chartered Accountants of India (ICAI) has unearthed cases of financial statements and audit reports of certain companies with forged signatures of auditors, sparking off fear of a larger menace that may have hit the country’s auditing fraternity.

At a time when the government is going all out to set right the audit profession, cases of forged audit reports have put the regulator on the defensive.

The cases reported so far relate to forged signatures and misuse of the seal of chartered accountants in annual accounts and tax audit reports of companies, said an ICAI official. ICAI is the country’s apex body looking into the functioning of auditors. While the cases include names of small and mid-level firms, the regulator is exploring chances of a larger spread of the forgery network.

The cases, though limited in number, have raised doubts over authenticity of financial reports, the official said, requesting anonymity. However, he refused to share details of the firms whose name and seal have been compromised due to the scam.

A special group has been constituted to look into the cases and suggest measures that can effectively handle such fraudulent practices. The matter, which was also discussed at the institute’s council meeting, has highlighted the need for stringent action against those found guilty. The law provides for penalty for a person who falsely represents himself as a member of the ICAI. “The council has proposed imprisonment of up to five years for any person found guilty of such a practice,” said the official.

The regulator is also planning to expand its random scrutiny for company audit statements in order to find out the veracity of the statements. The ICAI already has in place the process of random checks of financial statements of companies.

The ministry of corporate affairs, which is the administrative ministry for the ICAI, is mulling extensive reforms to bring more transparency in the auditing process and make auditors more accountable for their work.

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0 responses to “ICAI unearthed cases of financial statements and audit reports with forged signatures of auditors”

  1. Bajee says:

    The problem is that people in general treat CAs as mere AUDITORS, a term which is fradulenly used by ITPs not even qualified to call themselves ITPs. Any person can audit, like a club or a Ganapathi Utsav Committee. elects an ‘auditor’. An ‘auditor’ , in relation to a business house or a co. or a firm, etc., is a CA appointed to be its auditor. Crook and fraud ITPs as mentioned by BIDUP misuse this term to hoodwink and cheat the public and the government because the CAs Act does not prohibit the use of the word ‘auditor’ by such ITPs.

  2. Bidup says:

    Appropos of the comments of Mr. G.V.Ra@ikumar, an fraud ITP in Madras-Chennai had signed hundreds of “Audit Reports” for submission to various Banks for enabling businessmen to obtain loans. He used to fraudulently sign as “AUDITORS” with a Seal also. Apart from that, he also made crores of rupees through bogus IT refund claims in the names of non-existent prople, with bogus addresses and false and bogus TDS certificates. This is going on for 35-40 years and neither CBI nor the IT deptt. or even the Banks have taken any step to stop this. He signs documents as “AUDITOR”.

  3. G.V.RAVIKUMAR says:

    There are few people who are doing only Income tax and sales tax portraying themselves as chartered accountants and had signed IT -44 AB audit reports. When it was identified and reported to the bank who had recd. the reports, they have not taken any step against the clients nor the practitioner. Then who and how to bell the cat when the CAs are asked to maintain secrecy?.

  4. Jyoti C says:

    I hope, such instances have been reported to the MoCA, CBDT and SFIO for relevant legal action. There are too many frauds even among the profession who not only blackmail their clients but also defraud the State Revenues by representing bogus and false cases with concocted evidence and become too powerful over the decades by purchasing officers at the highest levels.

  5. PVSubrahmanyam says:

    It is suggested that ICAI may introduce digital identification for members to check this malpractice.If digital number like DIN for Company Directors is introduced for Members of ICAI it would be easy for verification of authenticity by user of financial statements .

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