Post the goof up by PwC in failing to identify the cooking up of Satyam’s books, during their audits, new audit firms have been assigned for caarrying out the audit of Satyam Computer Services.
Deloitte Haskins & Sells and KPMG, both part of the Big Four accounting firms, have been appointed as joint statutory auditors for Satyam Computer Services.
The newly-constituted three member board of Satyam had earlier said that it would appoint new joint auditors to audit the accounts of Satyam, following the software company’s former chairman B Ramalinga Raju’s admission of having forged the books over the past seven years.
When contacted, both Deloitte and KPMG declined to comment on the issue. Sources in the Institute of Chartered Accountants of India, the apex body for accountants in the country, had earlier said that the new board had been wanting to appoint firms from the Big Four - Price Waterhouse, the earlier auditor of Satyam is also part of the Big Four - as the new auditor. Ernst & Young is the other firm in the four member premier league of global accounting firms.
With PriceWater Hous Cooper having bungled up big time with the accounts of Satyam, and having failed to realise the Satyam scam of over 7000 crores during their audits is likey to be replaced by an Indian audit firm. The first step by the Government appointed board will hence be to get an auditing firm audit the accounts of Satyam and help restore investor confidence.
The government-appointed new board for Satyam Computer Services has declared that the fraud-hit IT bellwether will have a new audit firm to restate the books of accounts.
Given the investor’s mood against PriceWaterhouse (auditing firm of Satyam) and its rub-off effect on other foreign audit firms operating in India, there is a strong possibility of an Indian firm getting the mandate, said experts.
‘Ninety-nine percent the new mandate will be given to a reputed Indian audit firm,’ RG Rajan, a city based auditor, told media.
‘It is now established that the foreign audit firms are not worthy of shareholders’ trust. The firms are beyond the Indian law. The Satyam board should now appoint only an Indian firm and there are many reputed firms in the country,’ S Gurumurthy, auditor and noted commentator, told reporters.
Agreeing with him, another senior auditor on condition of anonymity told media: ‘Foreign audit firms have commonality of interests. In the present case only a reputed Indian audit firm can infuse investor confidence of the true and fair view of accounts.’
‘It is the domestic industry that should be faulted for the roaring business that the foreign audit firms have here,’ he added.
While auditing textbooks describe an auditor as merely a watchdog and not a bloodhound, Gurumurthy says the new auditors for Satyam will not be the latter.
Categorically saying that he would decline if the assignment is offered to his firm, Gurumurthy said, ‘The new auditor will look at how fictitious assets were created and the mode of approval given. One has to see the roles of individuals - whose role to do what.’
Meanwhile, it will be interesting to note how Satyam removes PriceWaterhouse as per the Company Law an auditor will hold office from the annual general meeting (AGM) to another AGM.
Though it is very clear that Ramalinga Raju had managed to cook the books of Satyam to a figure of Rs. 7,800 crores, the fact remains that the top auditing firm PriceWaterhouse saw no fraud in the IT company’s accounts during 2007-08. The Chartered accountants body, ICAI on Saturday issued showcause notice to auditor Price Waterhouse on its role in vetting Satyam’s accounts.
The ICAI President, Mr Ved Jain on Saturday said the showcause notice has been issued and Price Waterhouse has been asked to reply within 21 days. Price Waterhouse has maintained that it followed applicable audit standards and went audit evidence provide d by the company.
Ernst and Young (E&Y) did the valuation of Maytas Properties and a Delhi law firm Luthra and Luthra the title diligence of the real estate company’s assets, records of the controversial Board meeting at which Satyam Computer Services was allowed to buy two firms linked to its disgraced promoter B Ramalinga Raju show.
E&Y, which is also the internal auditor for Satyam, has all along denied doing any work for Satyam related to the failed acquisitions and its representative has said it had “no connection of any kind with the transaction”.
The Satyam board, at its meeting on December 16, approved buying 100% of privately-held Maytas Properties for up to Rs 6,410 crore and Maytas Infra, a listed infrastructure company, for about Rs 1,500 crore.
The minutes of the meeting show that V Srinivas, the CFO of Satyam, informed the board that E&Y valued Maytas Properties at Rs 6,523 crore.
Satyam’s statutory auditor PricewaterhouseCoopers is already under pressure to explain its role after Mr Raju confessed on Wednesday to falsifying accounts to the tune of Rs 7,000 crore. The key members of PwC’s audit team with Satyam included S Gopalakrishnan, Srinivas Talluri, Ravindranath and R Srinivasa Sankar.
Loading ...