KPMG cant audit for Satyam, its not registered: ICAI
January, 16th 2009
If Price Waterhouse, auditors for the crisis-hit Satyam Computer Services, has drawn widespread flak for its role, another global firm, KPMG, drew instant criticism after being called, along with Deloitte, by the new Satyam board to look into the mess.
The ICAI President, Mr Ved Jain, said, KPMG cannot be an auditor for Satyam as it is not registered with ICAI. It is not subject to the code of conduct prescribed for CAs. They are also not subject to disciplinary proceedings.
He said ICAI will take up the issue of KPMG with Satyam and also the Government. On Price Waterhouse, he noted that ICAI could issue a notice in the wake of the Satyam fiasco as it was registered with ICAI, but in the case of KPMG, it could not do anything. A KPMG spokesperson said, We are working with the board of Satyam. The scope of work and terms of reference are being discussed.
Meanwhile, Price Waterhouse said that in the light of the statements made by Mr B. Ramalinga Raju, former Chairman of Satyam, its audit reports and opinions in relation to Satyams financial statements for the audit period should no longer be relied upon. In a statement, Price Waterhouse said it performed audits of Satyam from the quarter ended June 30, 2000 until September 30, 2008.
It further said the letter dated January 7 from Mr Raju referred to material errors in the companys audited financial statements of which Price Waterhouse was previously unaware. The representations made by the Chairman and other management during the audit now appear to be false and, therefore, are no longer reliable.
Interestingly, in its Auditors Report, in Satyams annual report for 2007-08, Price Waterhouse stated: We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the audit. In our opinion, proper books of account as required by law have been kept by the company so far as it appears from our examination of those books. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account.
According to experts, the Price Waterhouse statement is an information to the public not to rely on financial statements certified by them since the Chairman of Satyam himself has accepted financial and accounting irregularities. It cannot be seen as direct admission of audit failure by Price Waterhouse, experts said.
Mr Shantilal Daga, a Central Council member of ICAI, said the announcement was in accordance with international law under ADR, and SEC. Already, about 10 law suits have been filed in the US against Satyam.