Outraged auditors see action from regulators ahead

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Outraged auditors see action from regulators ahead

The Satyam scam has evinced wide-ranging responses from auditors — but mainly one of shock. Shailesh Haribhakti of Haribhakti Group said he was, “absolutely shocked after hearing about the Satyam scam.” Action, he said, will now be taken by regulators at every level.

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The Satyam scam has evinced wide-ranging responses from auditors - but mainly one of shock. Shailesh Haribhakti of Haribhakti Group said he was, "absolutely shocked after hearing about the Satyam scam." Action, he said, will now be taken by regulators at every level.

Dolphy D'Souza, Partner, Ernst & Young, said the size of the fraud was huge and that they will have to look into details. "Auditors will be questioned; the matter cannot be wished away," he said. D'Souza added there would be huge implications from overseas regulators.

Pankaj Jain, Cousel Member, ICAI said that one should refrain from making any hasty judgments on prima facie details. He said that PriceWaterhouse Cooper may be asked to re-state accounts of Satyam.

Jain added there is nothing like debarment with respect to PriceWaterhouse Coopers as it is not a firm registered in India. He said, "If people are found guilty then their names would be removed as members of the Institute for a specific period of time. There is also now a provision for financial penalties that can be levied on audit firms. This is as per the new CA Act. As you can see, even the Company's Bill had proposed penalizing auditors in case they are found negligent."

Richard Rekhy of KPMG said such a fraud requires a number of people, not just one person and that it is difficult to point fingers at only one agency. He remarked it has been happening for a number of years, and when management is involved to such an extent it is difficult for auditors who are relying on companies' confirmation and certification.

Rekhy added that auditors rely a lot on bank confirmation and various other certifications plus some of its audit procedures. "The auditor comes in last in a sense that he relies upon various confirmations, certifications and he also conducts certain audits procedures. So, it would be unfair at this stage to comment with out a proper investigation being carried out," he said.

As per the latest updates, PricewaterhouseCoopers said, "We have learnt of the disclosures made by Chairman of Satyam  and are currently examing the contents of the statement." They further stated that they are not commenting further on this subject due to issues of client confidentiality.