ICAI to form Review Reporting Board to inspect audit reports

The Institute of Chartered Accountants of India (ICAI), the body that regulates the profession of chartered accountancy in the country, plans to set up a board to randomly scan the audit reports of banks, financial institutions and state-owned enterprises to avoid Satyam-like episode.

ICAI president Uttam Prakash Agarwal said the new board, to be called the Review Reporting Board (RRB), will have powers to examine even unlisted firms.

Currently, the Financial Reporting Review Board (FRRB), which was set up in 2004 to monitor and regulate the functioning of CAs in the country, picks up audit reports of about 50-60 listed companies and non-government organisations (NGOs) to see whether procedures are being followed.

Agarwal said he would bring the RRB proposal during the two-day council meet beginning on March 7. He added the RRB would have seven to eight members.

Like the FRRB, the new board can take suo moto action against the auditor if the audit report is not in order.

Six CAs to help CBI in Satyam probe
In another development, the Central Bureau of Investigation (CBI) has entrusted the ICAI with the task of studying the auditing and accounting aspects of the Rs 7,000-crore Satyam fraud. “A group of five-six senior CAs from Hyderabad has been constituted to examine this area of probe where the CBI doesn’t have the expertise,” Agarwal told Business Standard.

On being asked why S Gopalakrishnan, the tainted partner of Price Waterhouse who is in jail for his alleged involvement in the Satyam fraud, is still part of 11 committees of ICAI, Agarwal said the ICAI council was yet to consider the GTB case report (Gopalakrishnan along with other two auditors was found guilty) and unless the council declared him guilty as a president, he would continue to be part of these committees. However, he added that as a precautionary measure, Gopalakrishnan was not chairing any committee despite being a senior member.