oppn parties Accounting Scandals Keep Tumbling Out

News Snippets

  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
  • India has moved to the 40th spot in the innovation index, up 6 spots from last year
  • DGGI has alleged that top insurance companies, banks and NBFCs has committed a fraud of Rs 800cr by claiming input tax credit without underlying supplies
  • The Centre will borrow Rs 10000cr less than planned earlier due to good revenue collections
  • At $23.9bn, India's current account deficit widened to 2.8% in Q1, the worst in four years
  • Stocks continue to flounder on Thursday: Sensex sheds 188 points to 56409 and Nifty 40 points to 16818
  • The 36th National Games were declared open on Thusrday by PM Modi in front of a record crowd in Motera near Ahmedabad
  • Jasprit Bumrah most likely to miss T20 World Cup due to recurrence of back injury
  • PFI's political wing, the SDPI is on EC radar and action will follow soon if discrepancies are detected
  • Ashok Gehlot to meet Sonia Gandhi today, says all issues will be sorted out soon
  • Referring to the PFI ban, most Muslim organizations ask the government to take similar action against right wings organizations like the RSS, Bajrang Dal, VHP and the like
In a landmark order, Supreme Court rules that all women, married or unmarried, are entitled to safe and legal abortion up to 24 weeks of pregnancy as per the MTP Act
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Accounting Scandals Keep Tumbling Out

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

The chartered accountancy profession in India is passing through troubled times. With the regulatory body, Institute of Chartered Accountants of India (ICAI), acting like a spineless and mute spectator, the reputation of most accounting firms, including the big four, is taking a severe beating as audit scandals come tumbling out of the cupboard.

PwC had to endure a two-year ban as it 'failed' to detect the fraud in the books of Satyam Computer Services. More recently, Ernst and Young were suspended from bank audits as they 'failed' to detect the Yes Bank fraud. Now, the Enforcement Directorate has summoned executives of Deloitte and BSR & Associates (they work for KPMG in India) for the multiple frauds detected in IL& FS scam.

There is a growing perception in financial circles that these are not 'failures'. Experienced auditors like PwC, Ernst & Young, Deloitte & KPMG can point out cooked-up books in a flash. It is being alleged that auditors are colluding with managements to allow cooking-up of books. Auditors are turning a blind eye to accounting malpractices being indulged into by companies. From allowing concealment of losses and related-party transactions to ignoring fund diversion and even leaking insider information, accounting firms stand accused of unethical behaviour of all kinds.

The big four accounting firms have a firm grip on the profession all over the world. In India, they audit more than 70 percent of the big companies including groups like Tata. Since the government wants foreign investments to flow to India, it needs the backing of these audit firms. Hence, it has till now gone soft on them, despite their involvement in big-ticket scandals abroad and an increasing number of scandals in India. But with more and more scandals emerging, SEBI and the Serious Fraud Investigation Office, along with the ED, are examining the role of these auditors with a fine toothcomb.

The problem is that the profession in India is dominated by small players (audit firms with less than 5 partners) and they do not have the wherewithal to take on these global giants. Most Indian firms are also not interested in joining hands and merging to form a big firm to take on these giants, here and in other countries too. In fact, some of them are more interested to get the work palmed off by these giants in sub-contract. The ICAI is also dominated by these small players and they are more interested in retaining their turf rather than bringing discipline in the profession or ensuring that members perform their duties honestly and ethically. The National Financial Reporting Authority (NFRA), established with much fanfare in the aftermath of the Satyam scandal, remains a moribund body. Since the ICAI is either unwilling or unable to play the desired role in regulating the profession, the government must activate the NFRA, provide it with the required infrastructure and give it powers to ensure that audit firms maintain ethical standards and report all issues, even the smallest ones, with due diligence.

Pic courtesy: big4accountingfirms.com