Satyam effect: ICAI decides on deterrent action against CA firms

Business Daily from THE HINDU group of publications

Tuesday, Jan 13, 2009

Satyam effect: ICAI decides on deterrent action against CA firms

Our Bureau

New Delhi, Jan. 12 Chartered accountancy firms will have their names
published on ICAI's web site if any punishment meted out to their
partners or members extends beyond five years.

This decision was taken by the central council of the Institute of
Chartered Accountants of India (ICAI) at a specially convened meeting
today to discuss the Satyam case.

This is the first time that ICAI is looking to take deterrent action
against partnership firms instead of just the errant members. It is
contended that once the names of the firms appear on the ICAI web
site, the various regulators and the corporate sector would be
reluctant to appoint such firms as external auditors.

Briefing reporters on today's deliberations at the council meeting,
the ICAI President, Mr Ved Jain, also said that a special committee
would be set up to go into the root of the Satyam financial fraud and
come up with corrective measures in respect of the legislation and
rules governing the profession.

"The Central council expressed serious concern about the Satyam
episode. It is a fraud committed by the management with the connivance
of many people. We deliberated on how investor confidence on the
Indian financial system can be restored", Mr Jain said.

He also made it clear that Price Waterhouse had so far not submitted
any working paper to the institute. "Except the notice sent by us to
Price Waterhouse, there has been no other communication with the firm.
They have 21 days to respond", Mr Jain added.

Meanwhile, Price Waterhouse member, Mr S. Gopalakrishnan, who had
signed financial statements of Satyam during financial year 2003 to
financial year 2006, did not attend today's central council meeting.
The other Price Waterhouse member represented in the council — Mr
Harinderjit Singh, attended the meeting, gave his viewpoints on the
matter and walked out of the meeting, ICAI sources said.

Asked whether ICAI plans any interim action against Price Waterhouse,
Mr Jain said that no interim action was contemplated as there was
still no evidence before the institute that members of Price
Waterhouse, as statutory auditor of Satyam, had a role in the
financial bungling.

On bank auditors, the council has also decided to approach the Finance
Ministry to ensure that the boards of public sector banks do not have
the option to appoint auditors. "The RBI alone should appoint
statutory auditors for the banks," Mr Jain said.

He also said that private banks were appointing their own auditors and
this situation needs to be changed. Even in the case of private sector
banks, the RBI should appoint the statutory and branch auditors as lot
of public interest is involved here, especially that of depositors.

Copyright (c) 2009, The Hindu Business Line.

Source :
http://www.thehindubusinessline.com/2009/01/13/stories/2009011351750500.htm