Auditors barred for life over Satyam scandal
Indian accounting institute bans two auditors from practising, due to their roles in the Satyam scandal
TWO INDIAN AUDITORS have been barred from practising as accountants for their role in the USD1 billion Satyam Computer Services scandal.
The Institute of Chartered Accountants of India (ICAI) has barred Pulavarthi Siva Prasad and Chintapatla Ravindernath after finding them culpable of “serious gross negligence…in the discharge of their duties as audit team members” for Satyam statutory audits between April 2001 and September 2008.
Illicitly inflated profits from crooked books and unrealistic share values were at the heart of the Satyam fraud. Both accountants worked for Kolkata (Calcutta) – based Lovelock & Lewes, under an agreement with the Price Waterhouse (the Indian name for PwC) office in Bangalore, Satyam’s home city. ICAI’s disciplinary committee said an institute statement had “ordered the removal of the name of these two chartered accountants from the register of members permanently”.
They were both fined Indian rupees INR500,000 (£6,154), the maximum amount payable under ICAI’s founding legislation (it is a regulatory body established by national law). Understanding that this fine could be deemed rather small, the institute said it had asked the Indian government to “increase the penalty based on the misconduct and serious charges involved”.
Four other chartered accountants face disciplinary hearings over the Satyam scandal. However, because they have been in custody awaiting trial, the ICAI said it had not yet been able to complete disciplinary hearings against PwC auditors Talluri Srinivas and Subramani Gopalakrishnan, Satyam’s ex-CFO Vadlamani Srinivas and former Satyam internal audit chief VS Prabhakara Gupta. All four are now free on bail awaiting their trials and have – said the statement – used the Indian courts to postpone their ICAI disciplinary hearings.
The institute said it had been “doing its level best to conduct the hearings while giving ample opportunity to the…defence but the endeavour of ICAI at each stage has been hampered by the various court matters initiated by the respondents…to thwart disciplinary proceedings at each stage.”
Sensitive to criticism that the hearings have dragged on, the institute argued it “has been always pro-active in punishing its erring members” and that there was no need for another accounting regulator in India, noting: “Too many cooks spoil the broth”.
It added Talluri’s disciplinary hearing had now taken place in October; hearings for Gopalakrishnan and Srinivas should be held this month (December); but court stays are still in place preventing VS Prabhakara Gupta from being quizzed by the committee.