ICAI panel formed by the apex body of accountants to study the fallout of the scam at Satyam Computer Services Ltd proposed to set up a separate regulatory framework.
The separate regulatory is being recommended in order to oversee foreign entities providing a range of management consultancy, auditing and other services to Indian clients.
The committee set up by the accounting regulator, the ICAI to look into accounting loopholes exploited by the fraud-hit Satyam Computer to swindle investor money, has recommended action to be taken against Price Waterhouse and its auditors for disclosing information to an authorised audit firm — Lovelock & Lewes.
The finding of this surrogate practice was based on the supplementary charge sheet filed by the CBI on November 22, 2009.
The big four global accountancy firms — PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte — are circumventing laws to provide auditing services in the country, says the report of an ICAI committee.
The big four international accounting firms were operating in India through their domestic affiliates, it said.
The ICAI has decided to review financial statements of 150 listed companies across bourses as part of its policy to tighten accounting standards in the country after the Rs 8,000-crore Satyam scandal.
Any anomaly discovered would be forwarded to the MCA and market regulator Sebi for appropriate action. According to ICAI president Amarjit Chopra, the probe would be conducted by the FRRB.
The ICAI is planning to crack down on local CA firms that would indiscriminately use the brand names of the global firms they associate with.
A high-powered committee of ICAI set up to look into the accounting loopholes that were exploited during the Satyam scandal has recommended that there should be clear terms and conditions between the Indian CA firm and the foreign one for use of brand names.
ICAI’s probe panel has hit out at banks for not doing due diligence on Satyam Computer Services before giving loans, and wondered why the govt put Deepak Parkeh on its board, despite his HDFC group being a major creditor to Ramalinga Raju’s company.
“There is no explanation as to why the banks… while sanctioning short-term loans did not seem to have posed any question as to why the company, which was supposedly cash rich as per its financial statement, was taking loans from them,” said ICAI in its final report on the Satyam scam.
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