Improve audit practice: Letter to BS on 'Lessons from Satyam scam'

This is with reference to the article by Amit Tandon titled “Lessons from Satyam” (January 12). While the stock market regulator Securities and Exchange Board of India (Sebi) may be justified in levying a fine on Pricewaterhouse Coopers (PwC) for its role in the Satyam scam, it is questionable whether a ban of two years is warranted. PwC has, in the nine years since the scam erupted, strengthened its audit practice through better processes, training and improved quality control. PwC has been condemned in the court of public opinion and their reputation severely tarnished. Before contemplating a ban, Sebi should investigate whether PwC has actually improved its internal processes and quality controls. 

A ban of two years from auditing listed companies would cripple PwC’s audit practice in India, jeopardising the careers of thousands of professionals not involved in the scam, apart from inconveniencing the 70-plus listed companies that have appointed PwC member firms as their auditor.

Further, Amit Tandon’s suggestion to enhance the existing limits of fines on auditors puts the onus on auditors while exonerating managements who perpetuate such frauds. The Satyam scam reveals that auditors must have robust quality control procedures, that are regularly monitored by the regulators. Audit firms need to be strengthened, not destroyed, to improve the standards of audit in the country.

Srijit Basu  Gurgaon

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