SFIO probe to include internal, statutory auditors1 min read . Updated: 16 Jan 2009, 10:59 PM IST
SFIO probe to include internal, statutory auditors
New Delhi: The probe ordered by the government into the accounting scandal at Satyam Computer Services Ltd is comprehensive and extends to the examination of the role of the auditors as well as all the independent directors of the firm.
The consequences of any conviction following the government’s investigation will be more punitive, compared with the probe being conducted independently by the Institute of Chartered Accountants of India (Icai), say experts.
The matter is being investigated by the Serious Fraud Investigation office (SFIO).
According to a note sent by the ministry of corporate affairs (MCA) to the Company Law Board (CLB), a quasi judicial body which looks into cases relating to company affairs, the scope of SFIO’s investigation will also include the role of the internal as well as statutory auditors of the company and the due diligence exercised by them to ensure true and fair financial reporting, including in statutory returns and filings made by the company.
T.N. Manoharan, former president of Icai and newly appointed director to the Satyam board, said the findings by SFIO would lead to different consequences whereas Icai can take action against auditors found guilty under the Chartered Accountants Act, under which the maximum charge would be a withdrawal of the licence to practice and/or a maximum fine up to Rs5 lakh.
Statutory returns typically include updates on appointments of directors, shareholding pattern, capital structure and indebtedness as well as the year’s balance sheet. Satyam’s management is being accused of tampering with the books of accounts.
The note, a copy of which was reviewed by Mint, also says SFIO will look into the role of independent directors in misrepresentation and manipulation of information in the financial statement.
SFIO, which has been given three months to submit its reports, will also see whether there was any siphoning off of funds.
SFIO, which is part of the MCA, is a multi disciplinary body comprising experts from various fields such as company law, taxation and customs.