A YEAR after the Satyam scandal, the accounting regulatory body, the Institute of Chartered Accountants of India (ICAI), has recommended setting up of a whistleblower system within all audit firms.
The decision follows revelation in the investigation of Satyam scam instances when auditors were denied access to proper financial records by their client firm. A whistleblower system entails establishing a mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud or violations, directly to the management of the company.
This will bring ICAI on a direct information chain about the discrepancies as and when they take place. Also, we would be able to take prompt action, if any manipulative practices are followed by companies, said an ICAI official requesting anonymity.
If the new system is put in place, ICAI will get access to malpractice that emerge during the audit process. The ICAIs high powered committee on Satyam fraud case found that members of the audit team of the erstwhile Satyam did not have full access to Oracle Financials and they were only given view and read only access.