ICAI sets ball rolling against auditors

The Institute of Chartered Accountants of India (ICAI) has written letters to government agencies and Satyam Computer Services, seeking relevant information to initiate investigation into the role of the statutory auditor in fudging the accounts of the Hyderabad-based software services firm.
However, the institute, which regulates the chartered accounting profession in India, is yet to communicate with the statutory auditor — Price Waterhouse — regarding the overstatement of profit by Satyam over the years.
“Based on the collected information, the disciplinary board of ICAI may summon the statutory auditor and also the internal auditors,” Ved Jain, president of ICAI, told Business Standard, adding they hope to get the inputs from the ministry of corporate affairs (MCA) and the Securities and Exchange Board of India (Sebi) in the next two to three days.
Jain also met Corporate Affairs Minister Prem Chand Gupta on Friday and appraised of the steps taken by ICAI and the future course of action. “We plan to coordinate between various government agencies and ICAI,” Jain added.
ICAI has disciplinary powers against its members who are acting as statutory and internal auditors of any company. It has maximum powers to revoke the license for lifetime and also levy a maximum penalty of Rs 5 lakh. While statutory auditors are appointed by the company’s shareholders, the internal auditors are hired by the management.
ICAI is seeking the list of auditors (both statutory and internal) employed by Satyam, and also the balance sheet and other documents filed with the Registrar of Companies (RoC), with whom firms are mandated to submit a list of documents on a regular basis.
If summoned, ICAI’s disciplinary committee could seek the “working paper file” maintained by statutory auditors. Working papers contains all audit evidences collected while auditing the financial statements of any company.
This is expected to help the investigators to piece together how the financial fraud of this magnitude had taken place at the country's fourth-largest software firm.
Satyam's promoter, in a letter to the stock exchanges, said they had inflated profits and revenue of the company for many years, involving a total amount of around Rs 7,000 crore. Cash position alone was inflated by Rs 5,000 crore.
Srinivas Talluri, a partner in Price Waterhouse, was the statutory auditor for the IT major in FY08, as per the corporate information provided by third party websites. Satyam’s website was inaccessible to retrieve information.
Price Waterhouse is the only from among the big four audit firms to have registered with ICAI, as all its partners are Indians, said Uttam Prakash Agarwal, vice-president of ICAI.

sources:-www.calubindia.com