ICAI blocks KPMG

HYDERABAD: Global audit firm KPMG, which is now re-stating the accounts of tainted Satyam Computer Services, could face road blocks in doing

audit work in India.

The Institute of Chartered Accountants of India (ICAI) is of the view that the firm cannot carry out audit work in India since it is not registered here. “We have raised the issue with the government and expect the related agencies to take appropriate action,” according to Ved Jain, president ICAI.

While India is a member of the World Trade Organisation (WTO), the country has not opened up its services sector including auditing, accounting, taxing and legal services to foreign firms. “No foreign firm can perform these services in the country. However, most leading accounting firms including KPMG can carry out management consultancy services in the country,” he said.

KPMG carries out auditing work in India through BMR & Co, an Indian chartered accountant firm that also signs on the balance sheets of Indian companies. Deloitte, on the other hand, does auditing through CC Chokshi & Co.

Deloitte has also been given the mandate along with KPMG to re-state accounts of Satyam after its disgraced founder B Ramalinga Raju confessed to perpetrating a Rs 7,000 crore financial fraud at the software firm. Deloitte Haskins & Sells is, however, registered with ICAI.

The council, which is investigating the role of PriceWaterhouse in the Satyam scam, expects to complete its report in three to four months.

“We have asked Pricewaterhouse to submit a report on their work relating to Satyam accounts. We have also set up a special committee to look into the role of the auditing firm to decide whether any negligence was committed. The committee will submit its report by the second week of February,” he said.

After the Satyam scam, the ICAI has set up a high powered panel to ensure proper accounting standards and transparency. “The committee will come out with their recommendations soon. Rotation of auditors is not mandatory for corporates world-wide. However, we have recommended to the government that in the case of banks and insurance firms, the auditors should be approved by the regulators, RBI and the Insurance Regulatory Development Authority,” the institute explained.