Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: articles on VAT and GST in India :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: form 3cd :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: cpt :: list of goods taxed at 4% :: due date for vat payment :: VAT RATES
 
 
« ICAI »
  Requirements for passing Information Systems Audit (Assessment Test)
  Exposure Draft of Clarifications to Ind AS 115, Revenue from Contracts with Customers
 Exposure Draft of Clarifications to Ind AS 115, Revenue from Contracts with Customers
 Exposure Draft of Clarifications to Ind AS 115, Revenue from Contracts with Customers
 Reconstitution of Group to study the existing norms for the appointments/re-appointments of statutory / internal auditors
 Reconstitution of Group to study and suggest changes in the Guidelines relating to Networking of CA Firms
 Reconstitution of Group pursuant to C&AG’s Report `Performance Audit on Appreciation of Third Party (Chartered Accountants) - Reporting in Assessment Proceedings’ for the year ended March, 2014
 Reconstitution of Group to look into the intricacies involved in areas pertaining to the disciplinary mechanism
 Reconstitution of Group to suggest ways and means for augmenting the income of Chartered Accountants Benevolent Fund
 Improvements to IFRS 8 Operating Segments (Proposed amendments to IFRS 8 and IAS 34)
 Reconstitution of Group to to review and realign the provisions of Chartered Accountants Act, 1949 and the Chartered Accountants Regulations, 1988

No clarity on legal action against auditors
January, 10th 2009

Angry shareholders of Satyam may be miffed with the statutory auditors who have come in for sharp criticism following the dramatic revelations of accounting fraud in what is being billed as the country's Enron. But there is not much clarity on the kind of action shareholders can take against the auditors Pricewaterhouse Coopers under the laws.

"The contract that the auditor has with the company is not a contract the shareholders or other stakeholders are privy to. Hence, under Indian law it would be difficult for the shareholders to take any action against the auditors under the law of contract," according to Namrata Mehta, corporate lawyer, Economic Laws Practice, a law firm.

"It is a ticklish issue. Since the statutory auditors are appointed by shareholders they are entitled to take legal action. But investors have to prove that they suffered huge losses," said V Murali, central council member, Institute of Chartered Accountants of India (ICAI).

The shareholders must establish that they relied upon the auditors and that they suffered actual losses. If these conditions are satisfied the claim could well lie against auditors.

Though the books of accounts are prepared by the company and looked in detail by internal auditors appointed by the management, statutory auditors cannot absolve themselves of their responsibilities, Murali noted.

"Action in law has generally been taken either in contract or in tort," Namrata stated. Tort is a wrongful act done willfully in circumstances involving strict liability for which a civil suit can be brought. To establish a claim in tort, the shareholders have to satisfy the court that auditors owe a duty of care to shareholders and that there was a breach of such duty.

Even if the company takes action against the auditors under contract it would be limited by the terms of the contract. Many accountancy firms limit their liability usually to an extent of the fees they receive from the company, Namrata said. "How the court will view the liability of the auditors of Satyam will depend upon the extent to which the court is convinced about a claim for negligence."

Meanwhile, the ICAI has taken up the issue 'suo motu' and has referred it to its financial reporting review board. "We would look at the sampling techniques adopted by the auditors and as to why the normal checks by auditors did not bring out the facts," Murali said.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Careers

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions