Monday, March 09, 2009

Auditing: Satyam and its aftermath

Set a thief to catch a thief...?
The Economic Times of 9 March 2009 published an item titled "More than one auditor likely to be must for cos". The ICAI - the body that controls auditors and audit functions in India - seems to be considering this option to avoid the mistakes by PriceWatehouse Coopers now involved in the Satyam financial scam.
In my opinion, this is another way to cover up for the mistakes made by the audit firm and its audit team, and also to ensure more business for its members (chartered accountants). Whoever said that where one of the big four audit firm is not good enough, another would be?
The inefficiency of the ICAI has been highlighted in an article titled "Ad-ding to the investor's woes" by Rajrishi Singhal in the same issue of the Economic Times. The author says that ICAI "has shrugged off any culpability for the Satam scam....no one at ICAI stood up and declared that there's probably something intrinsically wrong with, or missing in, the ICAI rules, regulations and guidelines....instead of acting as the regulator, the ICAI is once again capitulating to the demands of the its clients and is planning to relax the accounting rules."

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