1. Detection of errors and fraud occur during the course of External Auditing( to detect frauds is the responsibility of the external auditor or not, has remain a debatable point.
2. Investigation of fraud is done by Police and Forensic Accountant and Auditor ( Forensic Accountant and Auditor can be hired by court or even by the Police and other agencies).
3. Prevention of fraud lies with the management of the company.

As Satyam fraud runs into billions of dollars, the investigation should be done by competent and qualified Forensic Accountants and not by the auditors of another audit firms. The evidence to be collected will have implications in a court of law.

I think that the role of a forensic accountant is more here.

2. This case also exposes the ability to critically use accounting and auditing skills of Indian CAs who conducted the audit. It also exposes their lack of continuing professional education. I am afraid that all the auditors really know the full contents of thirty three ISA ( ISA 200 ………. ISA 800). Why am I saying so because recently, I have conducted a study on the extent to which auditors fully comply with ISA. During the course of my survey, I was a bit intrigued to see that many of the professional auditors were not fully exposed to all these auditing standards and their proper interprepation.

3. In any auditing course, students are first taught how to audit cash and bank accounts? Satyam case, in the first instance, is a fraud of $one billion cash (details will be known only after investigation is completed the modus operandi used to commit fraud). Auditors should have carefully audited these two accounts, presuming that they may not be a part of the fraud.

If the above is the case, what are the legal liabiliies of PWC in case of Satyam’s frauds? What action the government or ICAI can take against PWC which does not have the attestion power for financial statements? The foreign audit firms recruit Indian CAs who are the registered members with ICAI. If any of its member has conducted audit for Satyam, then the action may be taken against those CAs who are the members of ICAI and have conducted audit of Satyam. It means that the punishment may be only to suspend their license for a period of 5 years. So in Satyam case, the legal onus is with the individual CAs who are the employees of PWC India and it will not be easy to take any legal action againt PWC, if upon investigation it is found that auditors have shown professional negligence while conducting the audit or were a part of the fraud. In such a case PWC will lose its reputation and I am afraid that this case will affect its global operations.

Any one can clarify the above position for the benefits of several readers.

i completely buy the argument put forth by UMA,

it is completely unacceptable that the auditors could not find out the correct cash balances, it is the basic audit procedure to verify cash which even the smallest of the organization would discharge accurately.
Further, the saga has shaken the confidence of the investors in the organizations and independent auditors which has brought a very bad repute to the auditing fraternity.

Now, CID claiming that two PWC auditors were interrogated and they admitted that all these frauds were done with their active participation.

So, we now all know what is PWC standards.. kick this PWC and all corrupt auiditors out from the civilised world

Studied all of the posts , but really becoming curious about ourselves! Guess why!
I’m from an SMB (in IT) of India and have got more or less all the news about the scam and the global recession as well, but we are really very lucky, because on an average, everyday we are getting some new clients who were previously handling with the so called ‘IT Giant Companies’ and now do you know their reaction, “just shot out the giants and welcome the SMB”.
Can anyone be able to answer me about this situation? Is it our Success or any other’s failure?

Answer to this problem is:

Indians are obcessed with westeners. Fact is, their education system is not credible & they sre more of technecians than well educated professionals.

There is need to review ICAI. ICAI does not hv any credible system of monitoring training of the articles & working of its members. There is no professional development program run on regular basis. Till 1991 all the examinars of ICAI had never tought at any level. Inly after 8 Indian nationalised banks became bankrupt they were quized so iCAI started appointing university lecturers. So their traning system was also not credible. Infact it was bankrupt. Even today ICAI is nothing more than a banya community run by few industrialists. Indian govt need to form a proper body to monitor training of auditors.

Also, its been highly surprising to note that all the ppl are relying on whatever has been communicated in the letter by Mr. Raju without even thinking that the letter was written by the person who has actually committed the offence or atleast spear headed it…. Is it right to just rely on this letter and tag other people esp when the talk is abt a set of professionals.

In my opinion we should all as a group maintain restraint and wait till independent organisations finish their probe and come back with adequate evidence to show whether the ppl involved are actually guilty or not.

Any kind of mud slinging at the auditors is not jut affecting PWC but also the whole community of auditors and also raises qs abt the credibility of the profession. So i request all to wait before passing a judgement on atleast the auditors.

- It is important to know how 7000 +crore fudging was possible ?

- How long did it actually take ?

- did the Rajus loose on the recent realty crash as well ? or did they loose on forex etc ?

and

- How many others are involved ?

regards
vinayak

Why I think the highest responsibility should be pinned on the auditors is that they perform a public duty. The shareholders trust the auditors to take care of their interests since they have no access directly to the books of account. Even the regulatory agencies such as SEBI depend on these audited statements. Bankers rely on these statements and lend money. Now because of the auditor’s mistakes, may be some Bank may go bankrupt and their shareholders may get affected. Hence I feel that auditors in this case deserve to be jailed for as long or more than Mr Raju.

ICAI , which is slowly becoming the hot bed of corruption bust be brought to books

Before making any such demands against a professional organisation, one needs to understand how the act has taken place and only then blames should be fixed…