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     Giant Side Hero Username: Giant Post Number: 3836 Registered: 11-2008 Posted From: 141.0.9.69 Rating: N/A |
Inthakee raju garu jail jeevitham mugisinattena? | ||
| Thelegend Moderator Username: Thelegend Post Number: 8491 Registered: 04-2008 Rating: N/A |
Can the penalty for aiding and abetting a Rs 7,000-and-odd crore fraud be just Rs 5 lakh and a debarment? That, incidentally, is what the Institute of Chartered Accountants of India â ICAI, the audit professionâs self-regulatory body â has fined C Ravindranath and P Sivaprasad, employees of Lovelock & Lewes, an affiliate of Price Waterhouse India, for their role in the Satyam Computer Services fraud perpetrated in cahoots with the promoter, B Ramalinga Raju. ICAI has debarred them from practising as chartered accountants by removing their names from the instituteâs register. A BusinessLine report quotes ICAI President G Ramaswamy as saying: âWe are proactive in taking action against our erring members. ICAI is competent and bold enough to take action. Our disciplinary mechanism is strong.â Maytas, another Raju group company that was at the real estate end of the scam, has been sold. Reuters How strong can be gauged from the fact that while Price Waterhouse India and its partners have settled with the US Securities & Exchange Commission â SEC, the US market regulator â for a penalty of $6 million (around Rs 30 crore) and debarment from any audit in the US till they comply with a whole set of demands imposed by the SEC, here they have gotten away with a minor fine. In an order dated 5 April 2011, the SEC said Price Waterhouseâs audit reports on Satyam âdid not conduct Satyamâs audits in accordance with PCAOB (the US Public Company Accounting Oversight Board) standards⦠Specifically, the PW India partners and staff on the Satyam engagement team failed to maintain control of the confirmation process with respect to cash and cash equivalent balances as well as Satyamâs accounts receivables. The failure to properly execute third-party confirmation procedures resulted in the fraud at Satyam going undetected until the former chairmanâs public confession in January 2009.â Further: âThe respondents (PW) failed to identify the material overstatement of Satyamâs assets, in part, because the engagement team failed to carry out the confirmation processes and procedures related to cash and interest-bearing deposits in accordance with PCAOB standards â and its own audit plan â for fiscal years 2005-2008. PCAOB standards require, among other things, that auditors test the existence and valuation of reported cash and interest bearing deposit balances.â Short of saying that the auditors were in league with the Satyam management, the SEC seems to be suggesting that the fraud could not have happened without the auditors knowing about it. The points to note are this: One, the fraud happened in India, and hence Indiaâs regulators and ICAI should have been first off the block. But while SEC has got a blow in, ICAI has done its two bits six months after the SEC. What does this say about the speed of its actions? Two, since it is more than likely that the two debarred auditors knew all about the Satyam fraud â they were doing the audits from 2001 to 2008 â is it enough to fine them just Rs 5 lakh each? Surely, they would have received more than their share of the Satyam loot for looking the other way when the fraud was being perpetrated over years? Three, the ICAI has been battling suggestions for creating a separate regulator or oversight board for audit companies, and has been particularly wary about market watchdog Sebiâs efforts to probe the auditorsâ role in the Satyam scam. Four, the most significant element in Satyam scandal, which started off on 7 January 2009 when Ramalinga Raju sent a letter (See here) to the stock exchanges informing them about the fraud, is that Raju never mentioned how his scam escaped the auditorsâ notice. This omission speaks louder than words about the nexus between management and auditors. The failure of the auditors to raise an alarm itself suggests that the audit profession is in need of strong external supervision and regulation. But there is not a sign of any contrition at the ICAI. BusinessLine quotes Ramaswamy of ICAI as saying: âThere is certainly no case for a separate regulator or oversight board to regulate audit profession as suggested by Sebi.â Well, the contrast between SECâs action against Satyamâs auditors and ICAIâs belies that claim. PS: All loose ends in the Satyam scandal are being closed one by one. Raju and Co are out on bail â and the cases against them are proceeding at a leisurely pace. The company itself has been sold to the Mahindras, who have chosen to pay off Satyamâs US investors at the cost of Indian ones. Maytas, another Raju group company that was at the real estate end of the scam, has been sold. YS Rajashekhara Reddy â former Andhra CM and a key link in the Satyam scandal, is dead. His son Jagan Reddy, who surely must know a thing or two about the scam, is being pressured by the Congress government because he has chosen to challenge the Gandhis. And now the auditors have got away with a rap on the knuckles. The Satyam scandal will soon be history with no lessons learnt. |
