ICAI moots strong punishment for Satyam auditors

Institute of Chartered Accountants of India (ICAI), the apex body of Chartered Accountants, today said any member of the body found guilty in the Satyam financial wrong doings would be severely punished and the auditors could even be barred from practising, for the lifetime.

"We will ensure that to any person who has not worked according to our standards and our expectations, severe punishment be given," ICAI President Ved Jain said after the financial wrong doings by India's fourth largest IT company were unearthed.

Also see: List of companies audited by Satyam auditors

Satyam's auditors, PriceWaterHouseCooper (PWC), declined to comment on the issue and did not entertain any query.

Following a letter from Satyam Chairman Ramalinga Raju, who accepted that he had misrepresented facts in the company's balance sheet, the role of auditors and accountants for the company has also come under scanner.

In fact, the Ministry of Corporate Affairs announced that role of directors and auditors at Satyam will be scanned by ICAI and the apex body of Company Secretaries -- ICSI.

Jain also pointed out that before the body takes any action against the members involved in the "fraud", it needs to collect all facts and information. "So we are looking into that and we will start our proceedings," he added.

On the possibility that the auditors were kept in the dark about the misrepresentation of accounts, Jain said that depended on the facts and circumstances of the case.

"As the information is tricking down to us, we need to examine what has really happened and how it has all happened," he said.

About possible action against the auditors or others party to the financial wrong doing, Jain said under the Indian Penal Code any person party to a fraud or cheating can be convicted.

"All one needs to prove is he was the party to the fraud. He can be booked under the Companies Act and the Chartered Accountants Act... In case of negligence by the chartered accountant, we have severe punishment," Jain said.

Meanwhile commenting on the issue, the apex Company Secretaries body ICSI said that at this stage the body has not come into the picture.

"If any member found guilty, we will deal with it according to the company secretaries law," ICSI President Keyoor Bakshi said.

The Company Secretaries Act has a provision for disciplinary action.

If any member, Satyam's company secretary in this case, is found guilty then the maximum ICSI can do is suspend membership, Bakshi added.

He also pointed out that the body has not yet asked for the report from the company and the report will come to them eventually.