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The Institute of Chartered Accountants of India (ICAI) is waiting for a report from the Serious Fraud Investigation Office (SFIO) so that it can against the auditor of the Saradha group, S K Gupta Roy.
According to K Raghu, president of ICAI, the CA institute had asked the SFIO numerous times for details against the auditor, but has not been given till now. Raghu was speaking to the media on the sidelines of its regional conference of the Eastern India Regional Council. According to reports, S K Gupta Roy was the auditor of over 50 firms of the Saradha group including Saradha Realty, Saradha Construction Company, Saradha Tours and Travels and Bengal Media. The Central Bureau of Investigation has named Saradha Tours and Travels, Saradha Construction and Saradha Realty in its first chargesheet in October.
He added that the institute gets the report from the SFIO, action would be initiated against the auditor. According to the procedure, if an auditor is found to be guilty of deliberately concealing a corporate fraud, he is served a notice. In the absence of a satisfactory reply, penal action is taken against the auditor which can lead to disqualification. “We have cancelled the certificates of the auditors involved in the Satyam scam, these issues are very serious for us,” said Raghu.
SFIO which submitted its report on the multi-million scam early September said that the Saradha group ran ponzi schemes through the 14 firms of the groups and it had collected deposits illegally. The report also said that the payments to the clients were primarily made from fresh deposits.
This is in violation of the Companies Act 1956 Section 58 A and Section 628 which says deposits from public cannot be invited without issuing an advertisement mentioning the financial position of the company failing which due action would be taken against the auditors and directors for negligence.
Raghu also said that ICAI had given suggestions to the government on the threshold of the quantum of corporate frauds which needs to be reported to the government. “We have given the suggestions, we are waiting for a reply,” he said. On the government’s decision to increase the threshold limit for bank branches to Rs 20 crore, Raghu said that ICAI had discussed the issue with the Finance Ministry to bring it down to the previous limit of Rs 6 crore.
