Within just one day of Satyam’s Promoter Chairman,Ramalinga Raju confessing to cooking up the Books, in his letter to the Board,the Auditing House and one of the ‘Big Four’,PRICE WATERHOUSE is already being relegated to history for their role in this unfolding and sordid Satyam Saga…remember how the Auditing Giant,Arther Anderson wound up when Enron failed !?
Price Waterhouse audits over 100 listed Indian companies like the Auto Giants Maruti and even the huge HCL Group in the Software Sector…so it’s not that they don’t have any experience of auditing software majors…..So their obvious lapses when auditing Satyam was a huge shocker
I remember that in 2007, when I was at a High Profile Corporate Governance Seminar in Mumbai where the dignitaries were Heads of Exchanges and Government Ministries and Leading Corporate and Auditing Houses from all over India,there was a very ‘show offy’ lady from Price Waterhouse whose presentation revolved around their specially developed software of a Corporate Governance System that clould be implemented by Corporates….When the Chief Secretary of the Orissa Government,one Mr Patnaik,asked her how much would this Software and Implementation Cost and could it be applied to PSU and Government Set Ups,this lady had the bloody cheek and arrogance to state ” You probably would not be able to afford it !…It would cost over Rs One Crore “….There was a shocked and studied silence for a few moments on her brazenness…When I was asked to address the audience I commented on this sort of arrogant and snobbish mindset by professionals..She was just one of a Tribe, that sadly has many members,who have inflated egos and inflated opinions of themselves and their firm and status….I daresay it’s a contagious American Banking and Corporate Trait…but look where it’s landed America and it’s once major Powerhouse Icons !
Auditors are appointed by Shareholders at the AGM to ensure Independent Review and Audit of the Financial Books and Assets…but for all purposes their Independence is severely compromised as they have to interact with Management and Promoters to solicit increase in Fees and potential other Business like Certification,Tax and Conultancy work in Mergers and Acquisition and Valuation Situations….even though the ICAI and the Companies Act has directives that should be followed and practises so as to not create any Conflict of Interest in Auditors,these firms find a way out by routing business other than audit to other front or related and friendly firms…as this is widely practised by most firms in this competitive era,the ICAI is not a very strict enforcer of directives and guidelines….this strengthens and makes for a compelling case for the government to intervene and set up a seperate legal body to conduct Audits or create a Regulatory Body for Auditors.In fact the New Amendments to the Companies Act will involve stricter and more stringent compliance by Auditors and Directors