Post the Satyam issue, the Institute of Chartered Accountants of India (ICAI) has cautioned its members "to be much more vigilant and rely on external information than be dependent on what the management provides".

In the case of Satyam, the management has inflated the sales receipts and doubled the figures. The company had 600 clients in some cases the sales price were doubled. The company within 90 days would show the money it received but it was never realised. For many years, the money was kept in the current account. When in 2006, two analysts asked why despite having a good cash and bank balance they were looking at raising funds, the management decided to move to show fixed assets. They were confident that this will get the auditors comfortable too. Besides the company created false FDRs receipts," Uttam Prakash Agarwal, President of ICAI, told mediapersons here.

Agarwal averred that the entire Satyam fiasco started as a minor adjustment in the balance sheet 5-6 years back. The amount when started was as low as Rs 10 crore, which went on growing year on year, said he. The management  decided to go ahead and talk about this as they were planning to raise funds and a third party auditor would have to go ahead and announce it.

The company had approached DSP Merrill Lynch to consider strategic option for Satyam. The management has also told DSP Merrill Lynch about the arrangement the company had, but the firm did not agree and said they would have to tell about this. Hence the management came up with the clarification, added Agarwal.

In an earlier statement, Agarwal had said that there is no ready evidence that the jailed Price Waterhouse (PW) auditors in the Satyam Computer Services scandal had also colluded. After the interrogation of CFO Vadlamani Srinivasan, and CAs Gopalakrishnan and Srinivas Talluri, the CFO admitted his role in aiding chairman B Ramalinga Raju and MD Rama Raju in fudging and falsifying the accounts. Vadlamani was candid enough, said Agarwal, to admit that he along with G Ramakrishna -- a cost accountant by profession -- were actively involved in the scam.

According to Vadlamani, another team which directly reported to the CMD -- led by G Ramakrishna -- executed the plan by fabricating and preparing false documents such as sales invoices, bank statements, bank confirmaions, by involving a team of around 10 junior staff. Vadlamani also said he had resisted the attempts of the management but could not to much in view of the master-servant relationship.

On the back of the Satyam episode, the ICAI is planning to seek more power for the chartered accountants (CA), wherein they are not mere qualifiers. In case they see any divergence in the numbers provided by the company, the management should go for a restatement of accounts.

As of now the role of a CA is to give opinion on the financial statement that is prepared by the management and check if they follow the norms. There are thousands of cases where CAs have reported on such incidents but no action against the company has been taken so far. Even in Satyams case, if the CA would have complained nothing would have happened, said Agarwal.