The Institute of Chartered Accountants of India (ICAI), the quasi-judicial body of chartered accountants in India, has sought more powers to auditors to chase the source of funds declared by companies while auditing accounts.
This is a direct fallout of the fraud at Satyam Computer Services, which led to two auditors from auditing firm Pricewaterhouse being arrested along with the perpetrators of the fraud, the promoters and the former finance head of Satyam.
The demand comes as charges are being prepared for the trial of the tainted managers of Satyam. An ICAI report submitted to the Central Bureau of Investigations (CBI) states that arrested chief financial officer Vadlamani Srinivas has told the ICAI that the auditors were innocent in the alleged Rs 7,000-crore fraud in Satyam.
While the CBI has taken note of the report, whether the two PWC partners will get bail will be decided by the courts, Uttam Prakash Agarwal, president of ICAI, told reporters in Mumbai.
The statement from Srinivas means that the auditors for PWC were well within their mandates when auditing the papers of the firm, as they did not have the power to question the management.
They only checked and tallied the proof of income and expenditure provided by the management. Many of these documents, such as fixed deposit receipts, were forged and could have been traced if the auditors had more powers.
“We are telling the government that auditors should be given the power to question and trace the sources of funds if they feel so,” Agarwal said.
Agarwal said the ICAI has submitted the result of its interviews with Vadlamani Srinivas, and S Gopalakrishnan and Srinivas Talluri, the two arrested Pricewaterhouse auditors, to the CBI on Sunday.