Deepak Parekh, chairman of HDFC Ltd and member of the government-appointed board of Satyam, on Wednesday suggested that there was gross failure on the part of PricewaterhouseCoopers, auditors of Satyam Computer Services, in not detecting the fraud at the latter.
Parekh told reporters on the sidelines of a corporate governance function organised by Confederation of Indian Industry (CII) here that “it is possible to detect fraud (at Satyam) by (just) looking at papers. Some of the papers that we have seen, it is was evident that they were forged.”
Saying that India Inc’s credibility has been put to test due to Satyam incident, he questioned, “Why are balance sheets, that look too good to be true, not questioned by auditors?”
Parekh said, “Reliance on external auditors is not sufficient to ensure good governance and detect possible wrong disclosure. Internal auditors should also be actively involved in the process.”
He said that both internal and external auditors should spend more time with each other and the audit board, independent of management.
Giving a benefit of doubt to independent directors, he said, sanitised information given to independent directors would make it difficult for them to decipher the actual condition of the company and perceive risk element.
Training his gun on promoters, he said that greed brews faulty governance in corporate. To check frauds, he advocated the need to intimate Sebi of any pledging of stake by a promoter.