ICAI blocks KPMG's Satyam assignment

1 Feb 2009, 0032 hrs IST, ET Bureau

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

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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 servicesto 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 properaccounting 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.

ICWAI/ICSI members should also be allowed to sign the Balance Sheet. Cost part and secretarial part nowadays matter the most. Why ignoring them? ICAI members may be renamed as Income Tax Accountant rather Chartered Accountant. They concentrate only on I.Tax matters they least bother in Central Excise matters which is the greater part of Govt. revenue rather I.Tax. All listed companies should have second check by ICWA/ICSI members. Most private companies do not have Board Meetings practically. They are family run companies. All decisions are by Head of the company. Yet we use the words Board Meetings General Meeting and more lot words and Balance Sheets are signed. Again concept of independent director/CFO have no meanings. Every employee goes by directions by Top boss as happened in Satyam. ICAI have no time to take action against Price Waterhouse Coopers rather they are allowed to Central Council of ICAI so that no action is taken. ICAI have time to make representation to Govt to oppose change of name of ICWAI to ICMAI and have time to welcome PWC members in ICAI premises but no time to detect mistakes, fraud whatever we call as happened in GTB, Satyam etc.