Business

ICAI for severe punishment

NEW DELHI: The Institute of Chartered Accountants of India (ICAI) on Wednesday declared that any member found guilty in the financial wrongdoings by Satyam Computer Services would be punished severely and the errant auditors could even be barred for life from practising.

Following the revelation of financial wrongdoings by the country’s fourth largest IT major, ICAI president Ved Jain said: “We will ensure that to any person who has not worked according to our standards and our expectations, severe punishment be given.”

The role of the auditors and accountants of the Hyderabad-based company have come under the lens following Satyam Chairman B. Ramalinga Raju’s letter accepting that he had misrepresented facts in the company’s balance sheet. Satyam’s auditors PricewaterhouseCoopers (PWC), however, declined to comment on the issue and ICAI’s warning.

Mr. Jain, however, pointed out that the ICAI needed to collect all the facts and data on Satyam’s accounts before taking any action against the members involved in the fraud. On the possible action against the “guilty” auditors or others involved , Mr. Jain said any person party to a fraud or cheating could be convicted under the country’s penal code. “All one needs to prove is he was the party to the fraud. He can be booked under the Companies Act and the Chartered Accountants Act ... in case of negligence by the chartered accountant, we have a severe punishment,” he said.

Commenting on the issue, apex company secretaries institute the ICSI said the organisation was not in the picture in the current juncture. “If any member is found guilty, we will deal with it according to the company secretaries law,” ICSI president Keyoor Bakshi said.

Corporates expressed deep shock and asked the government to plug loopholes in corporate governance so that the confidence of companies and investors, particularly global, could be restored in the Indian corporate sector.

Terming it as a ‘stand-alone’ case of corporate governance failure, the apex body of IT and BPO industry, the Nasscom, said: “This is not in any manner a reflection on the industry or corporate India. We will ensure that customers and other stakeholders get the right perspective. We will also work with the Satyam taskforce to reach out to their customers and employees and guide them through the transition.”

Similarly, top apex chambers have urged government and regulatory authorities to take immediate corrective measures.

“Satyam was always seen as one of the top Indian IT companies and often represented as shining example of Indian liberalisation and entrepreneurship. This fraud on the investors and employees of the company shows a systemic breakdown in audit and board’s oversight of the company,” said Rajeev Chandrasekhar, MP and President, FICCI.

The CII called for immediate examination of the loopholes in regulation, accounting, audit and governance. The Assocham demanded a special committee to be set up to investigate the entire Satyam issue so that culprits are identified and brought to book.

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