Satyam Fraud Trigger Tighter Accounting Rules in India
India’s chartered accountancy regulatory body has urged the government to tighten laws of the profession in view of the Satyam fraud that rocked the financial world last year. ICAI (Institute of Chartered Accountants of India) set up a panel to discuss how such accounting frauds can be stopped. It has recommended that the audit work be sub-contracted and be more strictly regulated.
The Satyam Computer Service fiasco of last year rocked the financial world in 2009 and has led to the need of tighter rules and a stricter code of conduct for accountants.
The Institute of Chartered Accountants of India also recommended that errant accountants be publicly shamed, which would act as a warning for other professionals in the industry.
ICAI also put in recommendations to the country’s government of developing a corporate governance code, especially designed for audit committees, independent directors and chief financial officers of all publicly listed companies of the country.
Satyam Computer Services, a Hyderabad- based company shocked the world when it was found that founder Ramalinga Raju had confessed to having “cooked the books” and misstated the accounts over several years. The confession came out in January 2009 and has given rise to the India’s biggest corporate fraud enquiry.
ICAI published a report that says that all auditing firms and institute members who will be found guilty of misconduct should be listed on the official website of the regulator and that this should happen 3 years after cancellation of the membership of the offending party.
The Satyam fraud is still under investigation by both the ICAI and government bodies.
At present, the ICAI is investigating the roles of Srinivas Talluri and S. Gopalakrishnan, both of whom are senior PriceWaterhouse partners in Bangalore. They have been released on bail.