Mumbai: At least a month after it launched its investigation into Satyam Computer Services Ltd and its auditors Price Waterhouse, India’s apex accounting body said it would need more time to complete its inquiry because it can only do so after the accounts of fraud-hit Satyam have been restated.
A committee set up by the Institute of Chartered Accountants of India, or Icai, was scheduled to present its report on Wednesday.
Fraud fallout: A file photo of former Satyam chief B. Ramalinga Raju. Madhu Kapparath / Mint
Icai president Uttam Prakash Agarwal also effectively admitted that Icai will not be able to take any action against Price Waterhouse because it is not a member of the institute.
Icai members are individual chartered accountants, not firms. However, the two arrested Price Waterhouse employees are members of Icai.
Icai is one of several agencies investigating the fraud at Satyam, whose former chairman B. Ramalinga Raju admitted in a letter dated 7 January that he had manipulated the company’s books to the tune of at least Rs7,136 crore.
The disclosure came three weeks after Satyam’s board approved a merger of Maytas Infra Ltd and Maytas Properties Pvt. Ltd, two companies promoted by the Raju family with the software firm.
The deal was scrapped just a day later in the face of shareholder backlash.
On Wednesday, at a press conference, Agarwal also said the accounting body would approach the courts for permission to interrogate Ramalinga Raju, Satyam’s former chief financial officer Srinivas Vadlamani, and the two Price Waterhouse auditors, all of whom are in jail.
Agarwal said the committee investigating the Satyam fraud “has issued show cause notices to the auditors”.
Earlier this month, the Supreme Court allowed stock market regulator Securities and Exchange Board of India, or Sebi, to question Ramalinga Raju and his brother and former managing director of Satyam, B. Rama Raju, almost three weeks after it had moved a local Hyderabad sessions court for permission to do so.
Agarwal added that Satyam’s new government-appointed board will appoint Indian auditors to certify the restated accounts. The restating is being done by audit firms KPMG and Deloitte Touche Tohmatsu India Pvt. Ltd.
“The company secretary of Satyam has approached us to conduct background checks on 10 auditors shortlisted so far” for reviewing the restated accounts, he said.
“The moment I come to a conclusion that there is prima facie evidence against any member of the institute, within six months, the disciplinary committee of Icai will come out with its finding on the matter,” Agarwal said.
In its interim report submitted on Wednesday, Icai is examining audit reports submitted by Price Waterhouse, besides “the association of partners of the audit firm with other firms, usage of same premises of the firm as head office and branch office of other firms and allegation as to usage of common permanent account number or PAN by several firms”.
“The committee is also inquiring (into) the role of one of the institutions that sold 2.45 crore pledged shares of Satyam between 23 December and 5 January because we want to bring it on record that the auditors were not at fault as a lot of other people are involved in the scam,” added Agarwal, declining to name the institution.