ICAI can cancel licence

Accounting regulator Institute of Chartered Accountants of India (ICAI) has said it has the power to strip an audit firm of its licence if there is sufficient proof of extensive wrong-doing. The extent of ICAI’s disciplinary powers has grabbed attention after the auditor of Satyam, Price Waterhouse, came under scrutiny for its alleged role in the fabrication of the software exporter’s financial statements. Though ICAI’s disciplinary action is usually focused on erring individual chartered accountants within an audit firm, it has the power, albeit rarely used, to send the firm itself out of business. Former ICAI president Kamlesh Vikamsey said if ICAI suspends or terminates the registration of an audit firm, it can no longer do audit work in the country. “Before commencing audit work, all audit firms in the country have to register themselves with the ICAI. This applies to even those audit firms associated with the big four accounting firms. The institute has the power to take action against any audit firm that does not comply with auditing standards,” said ICAI president Ved Jain. Former ICAI president Kamlesh Vikamsey said if ICAI suspends or terminates the registration of an audit firm, it can no longer do audit work in the country. “ICAI can suspend the registration of an audit firm if it has evidence that wrong-doing is not restricted to some partners and that the firm, as a whole, violated auditing principles...,” said ex ICAI president TN Manoharan. Meanwhile, activists and CAs are mounting pressure on ICAI to take action against Price Waterhouse, its partners who laid down its audit policies, those who signed Satyam’s balance sheet and all partners who benefited from the audit fee paid by Satyam. ICAI said on Monday that it will name guilty auditors on its website and ask capital market regulator Sebi to ban such firms from auditing listed companies. – www.economictimes.indiatimes.com