By Sachin Dave and Vinod Mahanta ET
MUMBAI: The Institute of Chartered Accountants of India (ICAI) is set to reiterate its demand for more powers to slap penalties on audit firms, following the action by the Securities Exchange Board of India (Sebi) against Price Waterhouse in the Satyam Computer case.
In a meeting scheduled with the Ministry of Corporate Affairs on January 18, the management committee of the ICAI may also discuss possibilities of levying additional fine on Price Waterhouse, a local arm of PricewaterhouseCoopers that was banned by Sebi to audit listed firms for two years. The committee may also ask for broadening the scope of such ban to cover auditing of even unlisted companies, said multiple sources at the institute.
"We have been seeking these powers since 2010 after the Satyam incident. The institute has proactively suspended the errant Price Waterhouse partners way back in 2012, much before the Sebi ban. In our meeting with the MCA, we will again request the government to give us more powers and also discuss the Price Waterhouse issue. The institute has never shied from taking corrective actions against erring firms proactively," said ICAI vice-president Naveen Gupta.
A growing number of senior members of the ICAI want to initiate action against Price Waterhouse, but under the current Chartered Accountant Act, the institute can only take action against individuals and not firms. ETspoke to several senior ICAI members about the issue, which is set to be discussed with the ministry.
According to people with direct knowledge of the matter, many senior ICAI members feel that Price Waterhouse must be penalised for Satyam scam. ET has seen an emailed letter with this demand, jointly written by the leaders of a few Indian audit firms to ICAI president Nilesh Vikamsey. "Sebi has banned Price Waterhouse from auditing listed entities but what about unlisted entities," a senior ICAI member and the head of one of the major Indian audit firms asked.
"We want the MCA to either take so me action themselves or allow the institute to initiate some action against the firm," he said. Many senior institute members want that an additional monitory penalty be levied on Price Waterhouse by the ICAI. There is also a demand that the firm be barred from auditing private companies for a few years.
Devaraja Reddy, a former president and senior member of the ICAI, avowed that the institute had approached the MCA with this demand even a month back. But he added that while the issue of Price Waterhouse would be discussed with the MCA, the main issue was that of additional power for the institute. "We had taken strict action against chartered accountants who were involved in the Satyam scam, but we can't take action against firms as per the current rules. We have approached the MCA to sogive us powers to do so," said Reddy.
According to people in the know, promoters of a few Indian firms wanted the ICAI to take strict action against Price Waterhouse, in order to send a message to the dominant foreign firms, especially the Big Four of Deloitte, EY, PwC and KPMG. Senior ICAI members were divided into two groups over the issue, said insiders. While one group is pushing for action against Price Waterhouse, which they think could send a strong signal to foreign firms,the other group wants to maintain the status quo.
"With the institute elections coming close, many senior members tend to make noise against foreign firms. However, in reality, the ICAI doesn't want this power to take action against firms as it could lead to lot of complications for elected members," said an ICAI member.
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