A report prepared by Indias apex accounting body that is investigating the role of the auditors in the fraud at Satyam Computer Services Ltd doesnt shed any new light on the subject and, apart from repeating charges made by the Central Bureau of Investigation, Indias federal investigative agency, suggests generic measures to improve the audit process in companies.

The report by a committee of the Institute of Chartered Accountants of India, or Icai, and headed by the institutes president Uttam Prakash Agarwal was presented to the ministry of corporate affairs (MCA), in August, but its contents havent been publicized. Mint has reviewed a copy of the report which effectively says that the institute doesnt have the required information to arrive at a conclusion.

There are bottlenecks to arrive at a final conclusion since the investigation and proceedings about the role of management and auditors in Satyam episode are in progress and the reason for audit failure are not yet fully ascertained, the report said.

It added that professional misconduct of members is regulated by the institutes disciplinary committee, which will arrive at a conclusion after verifying facts, evidences and other procedures prescribed under the Chartered Accountant Act, 1949, and other rules.

Therefore, the committee has restrained itself from making any comments on the role and functioning of the auditors vis-a-vis accounting and auditing standards. However, all the papers, documents and evidences will be handed over to the Disciplinary Directorate for taking up further proceedings... the report added.

The Disciplinary Directorate is the arm of Icai that investigates infractions by members and suggests punishment. This punishment has to be approved by the institutes disciplinary committee.

Agarwal declined comment on the report citing a past grievance with Mint. On 30 September, Mint had reported that the Satyam fraud had weakened Icai.

In January, Satyam Computers founder and then chairman B. Ramalinga Raju confessed to having fudged the companys accounts, over the years, to the tune of at least Rs7,136 crore.

S. Gopalakrishnan and Srinivas Talluri, partners at Price Waterhouse, Satyams auditor, and Srinivas Vadlamani, then chief financial officer of Satyam, all chartered accountants and therefore members of the institute, are in jail while their roles in the fraud are being investigated.

The ministry as well as some members of Icais council, a core body of the institute that looks at important issues, have found the report inadequate.

The ministry is reviewing the report but there is nothing in it that will prompt it to take any action. The committee members have not elaborated on their interrogation of auditors; (the committee) has not suggested whether the involved auditors were found guilty prima facie; and it has not suggested how the profession needs be redefined to handle (such) cases, said a senior MCA official who did not want to be identified.

The Icai committee was mandated to look into the financial reporting, accounting and auditing aspects of the fraud.

The report merely replicates the chargesheet of the Central Bureau of Investigation (CBI) and the findings of the SFIO (Serious Fraud Investigation Office of MCA). All that the committee has done is that it suggested names of three-four chartered accountants to CBI for further investigations and provided factual details of Price Waterhouse firms in India, said a council member who did not want to be identified.

At the very least, this person added, Icai could have looked into lapses that happened on the part of the auditors concerned.

The report simply lists the statements of the three chartered accountants on their level of involvement.

The report, however, does recommend ways to strengthen the compliance and regulatory mechanism. These things are more pronounced in the report than what went wrong with auditors, said the MCA official.

Still, there was not much Icai could do, said one of the institutes former presidents

The committee was powerless. It is only the disciplinary committee which can initiate action against auditors. These include imposing a fine up to Rs5 lakh and cancellation of licences of the ones found guilty, said Sunil Talati, former president of Icai.

Talati added that with CBI not parting with vital information, the committee found it difficult to arrive at any conclusion.

On 23 September, the five-member disciplinary committee of Icai (of which Agarwal is a member too) agreed with the findings of the Disciplinary Directorate which found S. Gopalakrishnan, Srinivas Talluri, Srinivas Vadlamani, P. Siva Prasad, the head of audit team, C.H. Ravindranath, a member of the team and the then head of Satyams internal audit cell V.S. Prabhakara Rao prima facie guilty.

The institute has asked all the respondents to give their written replies to charges against them by 23 October.