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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« Auditing »
 Supreme Court puts the spotlight on audit firms
 Auditing to be less of a burden as accountants embrace AI
 CAG's report on GST will be totally paperless
 Time Limit For Completion Of Assessment From The Date Of Special Auditor’s Report Under Income Tax Act, 1961
 Provisioning pertaining to Fraud Accounts
 Tax Audit Report (TAR) Certain exceptions and increased limits according to number of partners and considering nature of activity are desirable
 Cost Auditing Standards [ Cost Audit Documentation (102)] – Part-II
 Conference on Companies Act gets under way
 New bureau to dissolve state-run banks' power to choose auditors
 Foreign Exchange Management (Permissible Capital Account Transactions) (Fourth Amendment) Regulations, 2015
 ICAI forms 'prima facie' view on NSEL auditor

Now, Focus on improving audit quality - Satyam
April, 07th 2009

Satyam Computer Services CFO Vadlamani Srinivas admission that the companys auditors were not complicit in the Rs 7,000-crore fraud should provide   Price Waterhouse and its two partners some reprieve. Yet, that does not mean they should be absolved of the charge of negligence in exercising oversight on the companys financial statements. It appears the auditors did not physically verify bank statements provided by the company with the banks concerned.

Reports suggest the auditors relied on the statements provided by the cost accountant of the company, and communication between the auditors and banks were through the Raju brothers. That is an unacceptable practice. Confirming the veracity of bank statements independently is one of the basic tests auditors are expected to undertake.

And, undoubtedly, it is one of the easiest tests. Where such negligence of duty is seen, it should ideally be dealt with disciplinary action by the regulators, rather than with criminal proceedings. More importantly, internal check systems of the audit firms which could include review of the work of one partner by another should ensure high quality of audit. To the extent the auditors have carried out due diligence to the best of their ability and with integrity, they should not have much to worry about.

The quality of regulation is an important determinant of the quality of professional service rendered. While the ICAI moved with alacrity to inquire into the Satyam forgery case, its track record of disciplinary action on errant members does not inspire confidence. The crisis of confidence facing the profession, post-Satyam, did serve to jolt the professionals and regulators to take remedial action.

Auditors are reported to have become more cautious with verification of documents. That is indeed welcome. However, excess caution should not delay in finalisation of accounts and raise cost of auditing substantially. This must be avoided. Peer review of audits is set to become a norm. But that alone is not enough. Joint audits for companies that cross a certain threshold of revenues must be introduced.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 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