ICWAI wants to do 2nd audit of listed firms

The Institute of Cost and Works Accounts of India (ICWAI), an apex body to regulate the profession of cost and management accountancy in India, has proposed to the Securities and Exchange Board of India (Sebi) that it be considered to carry out a second audit of all listed companies.

In the wake of Rs 7,000 crore Satyam fraud, Sebi had announced that it would ask an independent team of auditors to conduct a peer review of the working papers of the financial statements of the auditors of listed companies.

“We feel such that an audit should be conducted by the ICWAI and discussions for this are on with Sebi,” said Kunal Banerjee, president of ICWAI.

While auditors look at various transactions and expenses incurred in a financial statement, cost accountants focus on input-output structure and look at justification and correctness of the declared profit, says Banerjee.

Terming the accounting fraud in Satyam an aberration, Banerjee said there was a need to have an independent body to regulate the services of auditors. This body, he added, should have representation from the ICWAI, the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI).

Incidentally, Satyam Computer Services was awarded the ICWAI National Award for Excellence in Cost Management for 2005 under the services category.

ACTION AGAINST SATYAM CFO
Meanwhile, the 21-member ICWAI council, in a meeting last week, took a suo motu decision to file a case against Vadlamani Srinivas, former chief financial officer of Satyam who was arrested by the Andhra Pradesh police on charges of fraud.

On Jaunary 7, Satyam’s founder and former chairman, B Ramalinga Raju, confessed to filling the company’s balance sheets with fictitious assets and non-existent cash.

The ICWAI would send a show-cause notice to Sriniwas early next week, said Banerjee. The maximum punishment under ICWAI rules, if a member is found guitly of professional miscodnuct, is permanent suspension of licence.

The ICWAI has set up a five-member team of cost accountants in Hyderabad to help the Central Bureau of Investigation probe the Satyam fraud.