PWC Partners admit to complicity in Satyam’s fudging
During the course of interrogation of the PWC partners, it has been found out that the auditors were part of the fudging process – in fact they have admitted to the fact. The partners, it is reported, were part of the monthly meeting by a core “accounting group” which used to meet to strategize on accounts to be presented to the public. I wonder how auditors could ever be a part of the accounting strategy team! Definitely a conflict of interest in my view! Accounting strategy and audit – it’s like saying the policeman is advising the robber on how to go about looting without getting caught!
The PWC partners admission has left the profession smelling of decay. We should be thinking rationally in bringing about reform to stop the stink from becoming universal and for regaining the lost confidence of the public from accountants. How can an MNC firm with regulatory oversight in various countries take the risk of destroying its global reputation? This is the same question which was raised when Mr. Raju admitted to fudging the accounts! What is apparent is that this is a fraud which had the auditors as partners for a few dollars more, and is going to raise a stink of far reaching proportions by the time the entire drama plays out.
The government and the ICAI have a lot to do to stop the rot and bring about some semblance of sanity to the accounting profession. During the BJP rule there was an Action Committee formed by Shri Gurumurthy to prevent the Big Five from coming to India as there is no reciprocal arrangement between the countries where they operate. But being ingenious people and having found enough Indian CA firms who wanted to globalize without looking at the repercussions or the direction which the profession was taking scrambled to become part of the Big Five. Of course we are left with only the Big Four with Arthur Anderson biting the dust over the Enron fiasco. Now we have the threat of the Big Four becoming the Big Three with PWC likely to be the next victim of a greedy practice overshadowing professionalism and ethics. It has been reported that all these firms have their headquarters in tax havens and not in the US or UK as otherwise thought. So we have a bunch of accounting “geniuses” exploiting every loophole available to not pay taxes.
The Indian government and the governments all over the world where PWC and the other big firms operate should go behind the veil to see exactly how these firms are structured. They operate through private limited companies which do not have any requirement of following ethical guidelines of the ICAI, they are free to advertise their services in the guise of advisory services. A visit to their websites will show all audit clients displayed in their list of clients, bypassing on the ICAI’s guidelines on maintaining web sites. Unfortunately the regulatory bodies have turned a blind eye to these practices, as some of the partners in the firm are part of the regulatory body. As a matter of self governance, the ICAI should ensure that its executive members who stand for elections are not a part of any of the Big Four firms who are operating in India through the back door.
The government should bring in regulations which debar the Big Four from operating in India – especially in the assurance services. There are a lot of Indian firms which have the capability as well as the capacity to undertake advisory services for the government – but just go through some of the tender terms which the government comes out with – these terms on capital adequacy, etc immediately rule out Indian firms thus leaving the Big Four only eligible for applying to the tenders. This kind of colonial attitude is what prevents the local firms from gathering mass and growing to international standards. Local firms have the people as well as the skills to take on the Big Four on an even playing field – if the government levels the playing field!
The PWC partners admission has left the profession smelling of decay. We should be thinking rationally in bringing about reform to stop the stink from becoming universal and for regaining the lost confidence of the public from accountants. How can an MNC firm with regulatory oversight in various countries take the risk of destroying its global reputation? This is the same question which was raised when Mr. Raju admitted to fudging the accounts! What is apparent is that this is a fraud which had the auditors as partners for a few dollars more, and is going to raise a stink of far reaching proportions by the time the entire drama plays out.
The government and the ICAI have a lot to do to stop the rot and bring about some semblance of sanity to the accounting profession. During the BJP rule there was an Action Committee formed by Shri Gurumurthy to prevent the Big Five from coming to India as there is no reciprocal arrangement between the countries where they operate. But being ingenious people and having found enough Indian CA firms who wanted to globalize without looking at the repercussions or the direction which the profession was taking scrambled to become part of the Big Five. Of course we are left with only the Big Four with Arthur Anderson biting the dust over the Enron fiasco. Now we have the threat of the Big Four becoming the Big Three with PWC likely to be the next victim of a greedy practice overshadowing professionalism and ethics. It has been reported that all these firms have their headquarters in tax havens and not in the US or UK as otherwise thought. So we have a bunch of accounting “geniuses” exploiting every loophole available to not pay taxes.
The Indian government and the governments all over the world where PWC and the other big firms operate should go behind the veil to see exactly how these firms are structured. They operate through private limited companies which do not have any requirement of following ethical guidelines of the ICAI, they are free to advertise their services in the guise of advisory services. A visit to their websites will show all audit clients displayed in their list of clients, bypassing on the ICAI’s guidelines on maintaining web sites. Unfortunately the regulatory bodies have turned a blind eye to these practices, as some of the partners in the firm are part of the regulatory body. As a matter of self governance, the ICAI should ensure that its executive members who stand for elections are not a part of any of the Big Four firms who are operating in India through the back door.
The government should bring in regulations which debar the Big Four from operating in India – especially in the assurance services. There are a lot of Indian firms which have the capability as well as the capacity to undertake advisory services for the government – but just go through some of the tender terms which the government comes out with – these terms on capital adequacy, etc immediately rule out Indian firms thus leaving the Big Four only eligible for applying to the tenders. This kind of colonial attitude is what prevents the local firms from gathering mass and growing to international standards. Local firms have the people as well as the skills to take on the Big Four on an even playing field – if the government levels the playing field!
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