The Institute of Chartered Accountants of India (ICAI) has asked the government to stop giving assignments to tainted audit firms, a move that would discourage wrong doings and promote entities with honest track records.
The accountant regulator has mooted this suggestion in its final high-powered committee report on Satyam submitted to the Corporate Affairs Ministry.
"The government may not entrust any government assignment to firms whose partners or staff have been found guilty of serious charges of misconduct," ICAI has said in its report. As per the current arrangement, the country's official auditor Comptroller and Auditor General appoints statutory auditor for public sector companies on its behalf, while for internal audit PSUs appoint their own employees or outsource work to a firm of their choice.
“The government should blacklist the firm which has committed any serious breach in public interest entities. If the government gives assignments to erring audit firms, it will set a wrong precedent,” a source in the ICAI said.
The ICAI has also sought amendments in the Chartered Accountant Act to be empowered to punish audit firms whose partners are involved in accounting frauds.