ICAI wants the auditors to have the right to rewrite the accounts
May, 04th 2009
Post Satyam scam, the institute of chartered accountants of India (ICAI) now wants the ministry of corporate affairs (MCA) to give the auditor the right to order rewriting of accounts, if a company is found to be not complying with the standards. Currently, an auditor can post his objection,(qualification as it is called in the accounting jargon),in the balance sheet.
However, now in order to prevent scams like Satyam, ICAI wants that in case of any qualification, the entire books of accounts should be re-stated doing way with the anomaly pointed out by the auditor. Or else the auditor would not sign the balance sheet, said ICAI's president Uttam Prakash Agrawal. The suggestion was put forth before the MCA a week back, and an amendment in the ICAI Act to the effect is likely to be introduced, he added. It is also important for the regulators like Securities and Exchange Board of India (SEBI) or the Reserve Bank of India (RBI) to take note of the qualifications and initiate the necessary action in the case, Agrawal insisted.
A few recommendations like, a system of having joint auditors as well as rotation of auditors, insistence on having a chartered accountant as the chairman of the audit committee, have been forwarded to MCA.