Satyam CAs, auditors may face severe punishment, PriceWaterHouseCooper, declined to comment on the issue
January, 08th 2009
The apex body of Chartered Accountants ICAI said on Wednesday that any member of the body found guilty in the Satyam financial wrong doings would be severely punished; auditors who were involved could even face a lifetime ban from practising.
"We will ensure that, to any person who has not worked according to our standards and our expectationsm severe punishment be given," ICAI President Ved Jain said after the financial wrong doings by India's fourth largest IT company were unearthed.
ICAI has said it will seek an immediate explanation from Satyam Computer's auditors, PriceWaterHouse Cooper, on the financial fraud perpetrated by the software company's chairman, B Ramalinga Raju, before taking any action.
"ICAI will write a letter to PwC tomorrow and will seek an immediate reply on the issue and inform them about the process of investigation, which is on," ICAI President Ved Jain told PTI.
He said that strict action will be taken if the auditors, of country's fourth largest IT firm Satyam, are found guilty.
PriceWaterHouseCooper, declined to comment on the issue.
Following a letter from Satyam Chairman Ramalinga Raju, who accepted that he had misrepresented facts in the company's balance sheet, the role of the auditors and accountants for the company has also come under the scanner.
In fact, the ministry of corporate affairs announced that the role of the directors and auditors at Satyam will be scanned by ICAI and the apex body of company secretaries, ICSI.
Jain also pointed out that, before the body takes any action against the members involved in the "fraud", it needs to collect all the facts and information. "We are looking into that and we will start our proceedings," he added.
Commenting on whether it was possible that the auditors were kept in the dark about the misrepresentation of the accounts, Jain said it depends on the facts and circumstances of the case.
"As the information is tricking down to us, we need to examine what has really happened and how it has all happened," he said.
About possible action against the auditors and/ or others party to the financial wrong doing, Jain said that under the Indian Penal Code any person party to a fraud or cheating can be convicted.
"All one needs to prove is he was the party to the fraud. He can be booked under the Companies Act and the Chartered Accountants Act... In case of negligence by the chartered accountant, we have severe punishment," Jain said.
Meanwhile, the apex company secretaries body ICSI said that, at this stage, the body has not come into the picture. "If any member found guilty, we will deal with it according to the company secretaries' law," ICSI President Keyoor Bakshi said.
In the Company Secretaries Act, there is a provision for disciplinary action. If any member, Satyam's company secretary in this case, is found guilty then the maximum ICSI can do is suspend membership, Bakshi added.
He also pointed out that the body has not yet asked for the report from the company and the report will come to them eventually.