Nearly three years after India's largest corporate scam hit the headlines, the Institute of Chartered Accountants of India (ICAI), which also functions as the regulatory authority for auditors, has finally taken action against some of the audit managers who audited Satyam's accounts.
The CA Institute has taken disciplinary action against two audit managers involved in the audit of the erstwhile accounting fraud-tainted Satyam Computer Services Ltd.
“The names of two audit managers involved in Satyam audit have been removed from the ICAI's members' register. They cannot now attest financial statements for life. We have also imposed a monetary penalty of Rs 5 lakh each — the maximum penalty permissible under law,” Mr G. Ramaswamy, ICAI President, told
The two audit managers who have been debarred are Mr C. Ravindranath and Mr P. Sivaprasad — both employees of Lovelock & Lewes, an affiliate of Pricewaterhouse India. As employees of Lovelock & Lewes, they had performed the statutory financial audit of Satyam Computers between April 2001 to September 2008 on behalf half of Pricewaterhouse India.
While Mr Sivaprasad performed statutory financial audit for the period April 1, 2001 to March 31, 2005, Mr Ravindranath did it for the period April 1, 2005 to September 30, 2008.
Plans are afoot to dispose of all pending disciplinary matters relating to auditors of Satyam Computer Services before the end of this month, sources said.
This is for the first time – under the new disciplinary mechanism introduced a few years ago – that the CA institute has imposed a monetary penalty as well as removed a chartered accountant's name from the members' register, said Mr Ramaswamy.
The CA institute's disciplinary committee had met on Monday to consider this matter and the letters informing the disciplinary action have been dispatched to the two members, sources said.
“We are proactive in taking action against our erring members. ICAI is competent and bold enough to take action. Our disciplinary mechanism is strong. But the cases sometimes take time as they are before courts. There is certainly no case for a separate regulator or oversight board to regulate audit profession as suggested by SEBI,” Mr Ramaswamy said.
The CA Institute has been criticised recently for its slack approach in taking disciplinary action against erring members and also those partnership firms that conduct deficient audits. There is no specific provision available in the law governing chartered accountants for sanctions against firms for deficient audits.
The ICAI has proposed to the Government that the law be amended to empower the CA institute to decide and levy penalty in line with the nature of the misconduct. It has also been proposed that CA institute should be empowered to take action against partnership firms and levy penalty on them.