The apex accounting body ICAI has sought more teeth from the government that would empower it to demand financial statements from companies and prevent Satyam-type accounting frauds in future.
"We are saying (to the government) that give us more teeth to summon financial information from corporates...We could get deeper. What we do currently is to see whether financial accounts, auditors' report, directors report, disclosures, etc meet the requirement of the accounting standards," Institute of Chartered Accountants of India (ICAI) President Amarjit Chopra told PTI.
Under the current dispensation, the ICAI keeps a vigil on the activities of companies through its financial review board (FRB) which was set up in 2002. The problem with the current system, he said, is that FRB cannot demand information directly from the company and has to depend on its member chartered accountants.
"Companies are not obliged to give information or will not be pronounced if they fail to do so...Primary data lie with the company. Auditor gets only the data provided by the companies. We will then write to Sebi and RBI. We will just say that these are the diversions that have been noticed," Chopra said.
Auditors' role have come in for criticism after Satyam founder B Ramalinga Raju confessed of having cooked the books of his company for years.
Two partners of PriceWaterhouse--Srinivas Talluri and S Gopalakrishnan--are facing trial for their alleged involvement in the Rs 10,000-crore accounts bungling in Satyam Computer Services.
"This (if FRB is granted the powers to summon books from companies) could help in preventing another Satyam. One thing is that corporate frauds will keep happening, but at least we can always work on preventive measures," the ICAI president pointed out.
Post-Satyam, the ICAI had set up a high powered panel to investigate the role of auditors Talluri and Gopalakrishnan in the Satyam fraud, besides suggesting ways to strengthen the regulatory functions of the Institute. The proposal to give more teeth to the ICAI is part of the committee's recommendations submitted to the government.