New Delhi: The fraud perpetrated by Satyam Computer Services Ltd’s founder B. Ramalinga Raju has claimed some collateral damage: the apex body of accountants in the country, and its current president Uttam Prakash Agarwal.
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The government has, in recent weeks, tightened its control over the Institute of Chartered Accountants of India (Icai) diluting Agarwal’s own powers in the process.
The move comes ahead of crucial elections to the body founded in 1949 and which regulates the functioning of at least 150,000 chartered accountants who sign off on the financial statements of companies—a sort of first line of defence against any financial misconduct by management or promoters.
Some of the government’s actions are seen by two people, an Icai council member and an official at the ministry of corporate affairs (MCA), as a reaction to Agarwal’s handling of the Satyam scandal, an allegation Agarwal denies.
Icai’s council is the institute’s core decision-making unit.
One of the charges against Agarwal is that he has been “soft” on S. Gopalakrishnan, a partner at Price Waterhouse, which audited Satyam’s books, and now in jail as his role in the Satyam scandal is investigated. “The allegation that I have gone slow on Gopalakrishnan or produced a weak report is absolute rubbish,” Agarwal said.
The most significant rule change, approved by Icai’s finance committee last week, requires all financial issues at Icai to be now cleared consensually by members of the panel, which has three government nominees. Previously, the president of Icai, the fourth member of the committee, used to take these decisions on his own without too much interference by government nominees. The fifth member of the panel is the body’s vice- president. “It has been decided that while (the) finance committee will not dig into expenditure that has been made in the past, in future, all finance-related matters of Icai will come to the finance committee; spending on infrastructure such as on Icai buildings across the country and events will also need to be cleared by the committee,” said a person familiar with the decision made by the finance committee who did not want to be identified.
This person also added that only a deviation of 20% from the proposed expenditure would be tolerated. Mint couldn’t independently ascertain whether there have been any significant infrastructural investments made by Icai in recent years and whether the projects concerned, if any, cost more than initial estimates.
The committee’s decision comes in the wake of an email sent by a government nominee on Icai’s council and Supreme Court lawyer O.P. Vaish to Agarwal on 18 August that suggested discussing the issue related to financial decisions and others at an Icai council meeting the following day. Mint has reviewed the mail, but couldn’t ascertain the status of the other points raised by Vaish.
Vaish himself couldn’t be reached for comment.