When its auditors were wrongly led to believe that the current asset figures given to it by Satyam Computers was prim and proper, the episode threw light on a fear that chartered accountants in the country have long harbored at the back of their minds, namely the lack of proper asset accounting.

Nearly two years after that incident, and the former chairman of Satyam Computers, Ramalinga Raju has been given conditional bail, chartered accountants are discussing the risky state of affairs in the corporate sector with regard to asset accounting.

There is hardly any difference between the private and public sector in this matter, and a majority of corporates do not have proper asset registers, says H Salim , who was formerly with the Accountant Generals office and has since audited different private entities.

In the absence of proper registers for either physical assets or current assets, corporate boards normally pass a resolution that they would soon finalise their asset registers, and the auditors ride on that promise to approve balance sheets, says Salim.

Unverified claims of assets, like a corporate in the petroleum sector showing an abandoned oil well in the asset list, can lead to deceptions of massive proportions, say chartered accountants, and the possibility of taking big-ticket loans. And the complexities of asset accounting have only increased with the emergence of technology-oriented companies, particularly in the IT and telecom domains.

R Suresh Mohan, a chartered accountant and former president of the Trivandrum Management Association feels as many as 80% of the corporates in the country do not maintain proper asset registers, including those in the government sector. The end result is that auditors keep qualifying their reports with the mention that fixed assets are not maintained properly.

Mohan says CAs are not expected to work with the mindset of a policeman investigating a crime scene when they audit books of accounts, but it is best to cross-check with a third party when in doubt. As for example, a cross verification with the bank would have exposed the false claims in the Satyam case, says he.

Kochi-based chartered accountant CJ Romid says the key to better corporate accounting is the existence of strong internal systems and controls. There are limitations in verifying every asset, and there is also the fact that valuations are not necessarily done on the day of auditing, says he, adding that it is beneficial, as is laid out in existing regulation, that auditors are changed occasionally.

Thiruvananthapuram-based chartered accountant Roy I Varghese says the complexities of asset accounting have increased given the fact that unlike in past days, assets are not easily identifiable and are also prone to quick obsolescence.

Particularly in areas like telecom it is becoming a challenge to account assets because they are based at numerous locations are have high obsolescence rates. Varghese suggests that one way out would be to physically verify at least a third of the assets every year so that in three years they would all be verified once.