Mumbai: Nearly eight months after the deadline for a special peer review of auditors of the 50 Nifty-listed companies initiated by the market regulator, the exercise prompted by India’s biggest accounting scam is yet to be completed in five firms.
A Mint survey of top audit firms and the 50 Nifty companies found that the review, in fact, hasn’t even begun at the auditors of four entities—State Bank of India, Punjab National Bank, SAIL Ltd and Jindal Steel and Power Ltd. At Bharat Heavy Electricals Ltd’s auditors, the process has begun, but is yet to be completed.
Testing processes: The Securities and Exchange Board of India headquarters in Mumbai. The peer review was mandated by the markets regulator after the Rs7,136 crore scam at Satyam Computer Services. Abhijit Bhatlekar / Mint
The review of firms that audit companies listed on the National Stock Exchange’s benchmark Nifty and Bombay Stock Exchange’s Sensex was mandated by the committee on disclosures and accounting standards at the Securities and Exchange Board of India, or Sebi, after the Rs7,136 crore accounting fraud at Satyam Computer Services Ltd.
Satyam’s founder chairman B. Ramalinga Raju, who has since been arrested, in January confessed to having doctored the company’s accounts over several years. Two accountants at Price Waterhouse, who had audited the company’s books, were among those arrested after the scam surfaced.
An exercise of this kind—a check of the work done by a company’s auditors by other auditors—was meant to test the robustness of India’s audit processes and instill confidence in global and local investors shaken by the scam that cast a cloud over corporate governance and auditing standards in India.
The review, covering fiscal 2008 and the first three quarters of fiscal 2009, was due to be completed by February this year, but there has been no update since on the peer review of any company. The Institute of Chartered Accountants of India (Icai) requires a peer review every three years.
Mint spoke to 17 audit firms who between them inspect the books of 47 of the 50 Nifty firms and audit departments/chief financial officers of at least 12 companies. Mint also spoke to officials at Oil and Natural Gas Corp. Ltd (ONGC), NTPC Ltd and Unitech Ltd, the three Nifty firms whose external auditors weren’t interviewed for this story.
Through their various associates, Deloitte Haskins and Sells, Price Waterhouse, Ernst and Young, and KPMG audit at least 31 Nifty firms.
Although an email questionnaire sent to Sebi remained unanswered, two senior Sebi officials, on condition of anonymity, said the process had been completed for auditors of most companies.
“A major portion of the process has been completed and the final report is expected to be compiled by the end of the year,” said one of them.
Waiting to be counted