How Reliable Are The Accounting Statements
The financial and accounting statements which the companies are mandatorily required to produce and submit to various agencies are supposed to carry a great degree of authenticity and
reliability once these pass through the hands of the auditors. When the auditors put their signatures upon them all we repose great faith in these statements and form opinions about the companies. And the auditors are chartered accountants who are bound by their by duties under the Companies Act and professional ethics as underlined in code of conduct laid down by the Institute of Chartered Accountants of India.
But the exposure of the recent scam involving Satyam Computers has put the lid off. There are exists a section of chartered accountants to whom professional ethics mean very little and they regularly flout the norms of ethics and the laws of the land to promote the shady interests of their clients. And Satyam Computers case is just the proverbial tip of the iceberg! The statutory auditors failed utterly in their duties and Mr. B. Ramalingam Raju admitted to his crime of misrepresenting facts in the balance sheet of the company which led to this scam involving Rs 8000 crore.
The auditors are called “watchdogs” for their role in upholding the interests of all sections of society who have vital stakes in the company. But in the case the auditors who belong to a premier audit outfit known over all parts of the globe PricewaterhouseCoopers were a party to all the dubious acts of Mr. Ramalingam Raju, the Chairman and Managing Director. They sold their conscience, character and professional ethics and judgement for some extra bucks. If statutory auditors of a well-known firm could behave in this shameless and reckless we can fairly hazard a guess as to depth of the rot which has set in the profession of chartered accountants.
Audit is basically an examination and and assessment of the annual accounts of a company which consist of the balance sheet and the profit and loss account together with other financial statements. An auditor has to conduct his job of test-checking of accounting transactions, inspect and verify the assets and study the internal accounting system before giving his opinion.
But in Satyam's case the auditors' silence was purchased by the management and sat as mere spectators as Mr Raju and his company perpetrated this massive fraud. Who's going to audit these auditors!
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