It is statutory for companies to get their accounts verified and checked by external auditors.
These Auditors are paid heavily to safeguard the interests of the stakeholders of a company.
How come these auditors do not do their work efficiently and detect wrongdoings on the part of promoters,managers in a company.
Classic examples are Enron and now Satyam.
To say that they followed standard auditing practices and are not liable for any mishaps in a company is preposterous.
The role of auditors is to unravel any misreporting and or mismanagement on the part of promoters.
It is ironical that the auditors do their jobs so bad that promoters get away with murder.
It is no way better than our police system in India where the investigations are carried out in a callous manner and the culprits get away scot free in courts due to lack of evidence.
Could we tolerate such behaviour on the part of auditors?
Price Waterhouse has now suspended the officials in the Satyam scam.
Is that sufficient?
The auditors involved in the Satyam scam are equally responsible and involved in the scam as much as the promoters.
Only strict punishment for auditors would bring in better sincerity and discipline amongst the auditor community.
2 comments:
I concur. I do believe that the onus of ensuring compliance with ethical norms and corporate laws pertaining to accounting practices within Satyam fell squarely on auditors.
The fact that books were cooked in such a systematic, methodical manner for a period of almost 7-8 years indicates the active or passive complicity of the auditors in the entire farce. It is indeed very difficult to fathom the auditor's assertion that they were innocent bystanders who hadn't a clue to what happened. All logical and physical evidence points to the contrary.
While it is imperative to punish the man who started it all (Raju), it is also equally important to send out a strong signal to errant auditors by means of instituting a thorough inquiry into their involvement and meting out appropriate punishment to the auditor concerned. It is human nature to cheat - one can't fault the student for cheating in an exam if the teacher makes it a point not to look too deeply. The fault here is with the teacher for not doing his/her job of ensuring honesty and transparency in the examination process.
In this case, PwC must be thoroughly investigated and dealt with sternly by the Govt. and as a symbolic mark of protest, Indian industry must refuse to deal with PwC for a couple of years.
Again, though I pray this to happen, I entertain little hopes of the auditors being brought to justice.
Dear Rajiv,
Whatever you have stated is correct and true.
The Auditors cannot be absolved of their responsibility and should not be spared for their complicity and ignorance about the happenings in Satyam.
Today's newspaper says that in USA the authorities have started strong action against PWC for their role in Satyam.
We can only wish that they are brought to book soon.
ananth iyer
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