The Institute of Chartered Accountants of India (ICAI), the regulatory body for audit and accountancy professionals, is probing PwC's role in
the Satyam case. ICAI president Ved Jain spoke to Rupa Sengupta:

A reputed audit firm like PricewaterhouseCoopers is embroiled in controversy. Does the Satyam scam reflect a larger problem with audit firms?

The Indian system is robust in its rules, regulations and compliance. Satyam was not governed only by Indian regulations. Listed in the New York Stock Exchange, it needs to comply with the Sarbanes-Oxley Act (SOX). Auditors work under the US's PCAOB (Public Company Accounting Oversight Board). As i've been informed, Satyam's auditors were doing the audit for its counterpart in the NYSE. So PCAOB carried out an inspection of the auditors as well.
There's no reason to assume that, because Satyam happened in India, there must be others. If such inferences are drawn, they can't be limited to India but would apply to companies the world over governed by SOX and PCAOB. Satyam is an exception, an aberration. This is not a case of system failure. I don't believe corporate chairmen and managing directors commit fraud as a rule, or that we can make wide assumptions about Indian society. People by and large are honest and carry out their jobs sincerely.

Doubts have been raised about ICAI's effectiveness as a self-regulatory body. Has self-regulation proved inadequate?

ICAI has been regulating for 59 years. One Satyam doesn't connote that ICAI has not been self-regulated well. Our record shows how strict we are in our code of conduct and discipline. We give severe and exemplary punishments. Earlier, our system was not very fast but we are now in a position to give speedy justice. We have three systems in place. A peer review board reviews a firm. A financial reporting review board reviews the financial statements from the listed company. And we have a quality review board. All are working perfectly.

Audit firms need to restore public confidence. What will ICAI's role be in this process?

We need to go to the root and identify where things went wrong, who were involved and give them exemplary punishment if they are found guilty, whether it is company directors and officers, bankers, internal auditors, statutory auditors, independent directors. We need to investigate and come out with the facts. I am of the view that what Raju has said in his letter is not the whole truth. There are inherent contradictions. He says: my company was not doing well for many years. If Satyam had a 3 per cent margin in such a good industry as IT, what were they doing? Press reports say they have the best clients. If so, I believe they're getting the best payments. We need to unearth the fraud. Whoever is involved and whoever was negligent, they need to be given expeditious and exemplary punishment.