Satyam scam puts ICAI on its toes

If the sordid Stayam-Maytas scam has any positive fallout, it may be that chartered accountants have become more aware of their shortcomings, and are taking steps to rectify them. K Raghu, a member of the central committee of the Institute of Chartered Accountants of India, said yesterday that international financial reporting standards (IFRS) would be made mandatory for large-scale companies by April 2011.

Speaking after inaugurating an investor awareness programme in Mangalore, Raghu also said the ICAI has formed a six-member high level team to go into the Satyam Computer Services fiasco. ''ICAI vice-president Uttam Prakash Aggarwal is heading the committee, which is expected to file its report within a month," he said.

He added that the ICAI has served notices on the auditors of Satyam and also the partners of the audit firm who signed the report. ICAI will initiate further action after a report is received.

ICAI's three-month pilot certificate course in fraud and forensic accounting began here on January 17, coincidentally coming on the heels of the Satyam fiasco, which has raised questions about an external auditor's ability to detect accounting frauds.

''Investigation into frauds is not a structured skill. It is a creative skill. Success in investigation and unravelling the modus operandi of frauds and forgery depend on the ability of investigators to think differently,'' said  ICAI faculty member Chetan Dalal.

Raghu said: ''ICAI has already recommended to the government to enforce a system of joint audit for listed companies. Along with the auditors appointed by the company, an external auditor appointed by the Securities and Exchange Board of India (SEBI) should conduct the audit. In addition, we have recommended that the private sector banks also should be subjected to audit by the Reserve Bank of India auditors/inspectors, on the lines of the public sector banks.''

Referring to the huge demand for accounting professionals, he said ICAI would start a course for accounting technicians, which would help develop second tier of accounting professionals. In addition, six certification courses for the members to gain specialized knowledge in various sectors would be introduced soon.

ICAI had set up 120 computer labs, including one in Mangalore. The state government had allotted 10 acres of land in Bangalore to set up training and development centre and a request had been made to the Dakshina Kannada district administration through the vice-president of ICAI, Uttam Kumar Agarwal, for land to set up another centre in Mangalore, he said.
(Also see: Can we prevent another Satyam? and Lessons from Satyam )