ICAI bans PW India's top auditor for life in Satyam case
February, 14th 2012
Trouble continues for the PricewaterhouseCoopers India network over the Satyam scandal. A little over two months after banning two audit managers from its India network, the Institute of Chartered Accountants of India (ICAI) has banned one of the firm's top audit partner Srinivas Talluri for life, while imposing its maximum financial penalty on him. Srinivas Vadlamani, the former CFO of Satyam , was also barred from attesting financial statements for life, apart from the Rs 5 lakh penalty.
More trouble is in store for PriceWaterhouse (PW) India, one of the audit firms of PWC India, as ICAI has also found S Gopalakrishnan-another PW India's top auditor who was working on the Satyam audit-guilty in the over Rs 14,000 crore scam at the IT major that was unearthed in 2009 after founder Ramalinga Raju made a confession. The quantum of punishment, however, is pending.
Jaydeep Shah, the new president of ICAI, said its disciplinary committee (DC) had found lapses in the working of the auditor and the ex-CFO and thus decided to go for the maximum action, which entails removing the names of the guilty from its Register of Members permanently. "We will now act against Gopalakrishnan and V S Prabhakara Gupta (ex-internal audit head of Satyam), who have also been found guilty."
The fresh action comes after a similar action against two junior auditors in December last year, who were also banned for life for "serious gross negligence" in the Satyam audit. Chintapatla Ravindranath and P Siva Prasad - who worked for Lovelock & Lewes then (an affiliate of PwC India network) - were audit managers, who performed the audit between April 2001 to September 2008 on behalf of PW India. A spokesperson for PW India said, "The DC proceedings are in context of individuals concerned and therefore as a firm PW India will not like to comment. However we are given to understand that ICAI's order against Talluri has been passed subject to the 'final orders' of Delhi HC in his writ petition challenging the validity of DC's proceedings. We are also given to understand that in the case of Gopalakrishnan, his hearing has been suddenly concluded by the DC last month without due compliance with the principles of natural justice and ICAI rules, thus denying him a fair trial and opportunity of defence."
The life ban imposed on one of the country's top auditors, S Talluri, is a welcome departure from the trend of impunity for professional lapses. The ICAI deserves credit for setting a new benchmark for regulatory diligence by overcoming the tendency among such statutory bodies of shielding errant members. A notorious example of this tendency is the failure of the Bar Council to take action against a senior advocate even after he had been successively indicted by courts for professional misconduct. The credibility of professional regulators took a further beating when the chiefs of the Medical Council of India and the Council of Architecture were arrested, allegedly for corruption in giving clearances to colleges. The ICAI's decision should not, however, divert attention from the need to make systemic reforms to give stakeholders a greater say in maintaining the integrity of professions.