RBI, SEBI looking into Satyam auditors' lapses

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The government on Monday said that accounting regulator ICAI has examined the alleged role of auditors in the Satyam scam and RBI and SEBI are looking into the issue.

Minister for Corporate Affairs Veerappa Moily, referring to the multi-crore scam in Satyam Computer Services, said the Institute of Chartered Accountants of India (ICAI) and the Ministry have examined the matter. The issue is before regulators - RBI and SEBI.

"RBI has been advised to take action against violators," Moily said, replying to a brief debate on three bills seeking to amend laws governing the professions of chartered accounts, cost and works accountants and company secretaries.

In both Satyam and Global Trust Bank cases, action against auditors, including Pricewaterhouse Cooper were delayed due to many court proceedings.

"There are a number of court cases. We will seriously see. In Satyam case maximum punishment was given to the CA," he said.

A massive accounting fraud in IT company Satyam Computer came to light in January 2009 after its founder B Ramalinga Raju admitted to fudging accounts for many years.

On members' concern that global audit firms come to India masquerading as consulting firms and set up surrogate companies violating law, Moily said the issue is being examined seriously.

"It is right. MNCs come as management consultants and start doing as surrogate firms...we will address the issue seriously," he said.

After Enron and other such scams, the government has made substantial changes in Chartered Accountants Act while the Chartered Accountants (Amendment), Bill, 2010 also addresses many issues including ethics and standards by corporate bodies.

"For the first time in the world, we provided legal status to corporate social responsibility," he said adding the new Bill also provides legislative structure to Serious Fraud Investigation Office (SFIO).

Earlier, the Rajya Sabha passed a bill that seeks to enable members of the three institutes ICAI, Institute of Company Secretaries of India (ICSI) and the Institute of Cost and Work Accountants of India (ICWAI) to form firms to offer their services and to form partnerships with members of specified professions.

The Bill - The Chartered Accountants (Amendment), Bill, 2010, which was introduced in Upper House in April 2010, also allows them to form limited liability partnerships (LLP) as defined by the Limited Liability Partnership Act, 2008.

It amends the Chartered Accountants Act, 1949, which regulates the profession of chartered accountants. It adds definitions of 'firm', 'partner', 'partnership' and 'sole proprietorship'.

Moily said the passing of the is a great step being taken particularly to respond to the vibrant service sector.

"LLP allows entrepreneurs, professionals, corporate bodies the kind of services they require," he said and stressed the need for capacity building.