ICAI asks Satyam not to give audit work to KPMG

The chartered accountant regulator, ICAI, has written to the newly appointed Satyam board that KPMG cannot do auditing and accounting work of the Hyderabad-based IT company and expected the board to take up the matter at its meeting tomorrow.

"We have written to Satyam board that KPMG cannot be appointed auditor for Saytam as they are not our members. We expect the board will consider the issue at its meeting tomorrow," ICAI President Ved Jain told reporters here.

When pointed out that KPMG would be doing a restatement of financial accounts, Jain said this is an assurance service that also involves accounting and auditing.

When asked whether the BSR and associates, Indian arm of KPMG can do the auditing of Satyam, he said KPMG cannot be involved in auditing directly or indirectly.

Satyam's new board has mandated KPMG and Deloitte to restate the company's financial statements, after founder Ramalinga Raju admitted cooking of accounts to inflate profits and create fictitious assets.

However, ICAI said KMPG cannot audit Satyam's books, even as the global auditor said it does not require to register with the regulator to restate the IT firm's accounts.

"KPMG is not allowed to practice in India... They are not registered with us," Jain said.

Reacting to ICAI's caveat, KPMG said: "It is our understanding that the scope of work (at Satyam) to be finalised is not reserved for CAs registered with the Institute of Chartered Accountants of India."

"We are working with the new board of Satyam Computer. The scope of work and terms of reference are being discussed with a view to their finalisation," the KPMG spokesperson said.