Action against partners, not audit firm, says ICAI
January, 10th 2009
The Institute of Chartered Accountants of India (ICAI) has said that the concerned partner who signed on Satyam Computers balance sheet will be held responsible and not the audit firm Price Waterhouse.
We can initiate action against the partners, if they are found guilty of audit failure but not against the firm, ICAI vice-president Uttam Prakash Agarwal told ET.
ICAI, an apex body for accountants and a quasi-judicial body, has already issued a notice to Price Waterhouse, seeking information on the partners and also copies of the accounts of Satyam that were audited by the firm, Mr Agarwal said. Price Waterhouse will be given a maximum of 30 days to respond to the notice. The disciplinary committee of the council will proceed on the matter if the firm doesnt respond by then.
The brazen falsification of accounts at Indias fourth largest IT company, Satyam, and the alleged failure by its statutory audit firm Price Waterhouse to detect the cover-ups has prompted both the ministry of company affairs and ICAI to take stringent steps.
Reportedly, Price Waterhouse partner Srinivas Talluri had signed on Satyams balance sheet. Another partner S Gopalakrishnan had signed on the companys 2006-07 balance sheet, a period that is also being looked into under the investigations.
If found guilty, ICAI, through its central council, can remove the membership of the chartered accountants. The institute can proceed only if we receive a complaint. Despite the public outcry, so far we havent received a single complaint neither from banks, nor from shareholders, Mr Agarwal said.
The institute, looking at the severity of the problem (in Satyam) has proceeded suo motto and issued the notice to the audit firm Price Waterhouse, he added.
Meanwhile, pressure has started mounting on two of the 40 central council members of ICAI to resign following the accounting scam at Satyam. Messages and email are doing the rounds among the CA fraternity seeking the resignation of PricewaterhouseCoopers partners and council members Harinderjit Singh and S Gopalakrishnan. The CAs feel that PwCs distance from the central council of ICAI will enable the institute to conduct an independent inquiry into the Satyam scam.
We have been approached by number of CAs to remove two of the central council members who are partners with PwC. However, we believe that ICAI is not a political platform where we should indulge into seeking resignations after a controversy. Both Mr Singh and Mr Gopalakrishnan are elected members of ICAI, Mr Agarwal said adding that both the PwC partners have assured ICAI of all cooperation in the investigation.
Despite repeated efforts, Mr Gopalakrishnan could not be reached for his comments while Mr Harinderjit Singh said: I am not part of the central council as a nominee of PwC and hence there is no question of my resignation. I m a central council member and represent the mandate from ICAI members.
Premature reports are pointing an accusing finger at PwC but let the investigations be complete, before blaming anyone for the Satyam Computers debacle, he added.