ICAI's move on Satyam Scam..Will the story change this time?

The Institute of Chartered Accountants of India (ICAI) has decided to issue a show cause notice to the auditors of Satyam Computer Services

in the backdrop of Satyam Computers chairman B Ramalinga Raju's sensational revelations on Wednesday.

Talking to ET, ICAI president Ved Jain said: "We have set the ball rolling. On the basis of statements made by Mr Ramalinga Raju, ICAI has already initiated proceedings against the concerned auditor. Under legal provisions our disciplinary committee can take cognizance of information from external sources and initiate action against our members. On the basis of the statement, a show cause notice will be sent to the auditor of the Satyam Computer Services."

Asked specifically, who the notice was being sent to, Mr Jain said: "I am told the audit firm was PricewaterhouseCoopers. A show cause notice will soon be sent to the auditor. This is indeed a situation where fingers are being pointed towards some chartered accountants."

On the issue, an ICAI council member who declined to be named said: "As auditors, we definitely have a role to play. This incident gives the entire chartered accountants fraternity a bad name. If we unravel any wrong doings on the part of the auditors, the institute (ICAI) will initiate action against the concerned auditor. Auditors base their observations on documentary evidence provided to auditors and Mr Raju did not mention that the figures provided to auditors were wrong. However, if the auditors have failed, the institute will file an 'Information Case' against the concerned individual (at PwC, in this case) as a first step."

The ICAI's Council is a core team that deals with critical aspects of running the Institute and policy matters involved as well as various accounting norms.

Experience, however, shows the process of ruling on such cases takes time. For instance, ICAI had initiated proceddings against the auditors of the erstwhile Global Trust Bank (GTB) a couple of years ago. The case is yet to be diposed off, the council member said.