KPMG is not allowed to practice in India and they cannot restate the financial statements of the beleaguered Satyam Computers Ltd, reiterates Ved Jain, president of The Institute of Chartered Accountants of India (ICAI).
“India is part of WTO negotiations. And it has not opened its accounting, auditing, taxation and legal services to foreign firms. So foreign firms, like KPMG are allowed to do only management consultancy work in India,” he said.
Satyam’s new board, it may be recalled, has mandated KPMG and Deloitte to restate the company’s results, after founder Ramalinga Raju confessed to doctoring of accounts.
Speaking to media persons during the inauguration of ICAI’s “Centre of Excellence” here on Saturday, Jain said, “KPMG is not authorised to do auditing work in India directly or indirectly. They cannot adopt surrogate practice and we are taking up this matter with the government.” The whole process of investigation on Satyam is progressing well and the report should be ready within the next 3-4 months, he added.
Talking about the role of PwC in Satyam’s fudged accounts, he clarified that ICAI has appointed a special purpose committee to look into the case and the report is expected to be out by the second or the third week of February 2009.
Replying to a query on what kind of action would be taken on PwC partner S Gopalakrishnan, who was arrested in Hyderabad recently for his alleged involvement in the Satyam fraud case, he said, “according to the law of the land, one cannot be given punishment till he is proven guilty and convicted by a court of law.” ICAI, a quasi judicial body, has a robust system in place to look after disciplinary issues. In fact, in the last three years, it had taken disciplinary action on 122 auditors including cancellation of licence for life time for three auditors, he asserted.
As regards the GTB case, Jain said, “it happened in July 2004. After getting cooperation from various agencies, we have managed to collect information and materials. Now the disciplinary committee of ICAI is investigating the case and it will soon be completed”.
Meanwhile, ICAI’s “Centre of Excellence” in Hyderabad will meet the ever increasing demand of capacity building, research and training and also act as a institution of higher learning in accounting, financial management and allied areas. It will also establish cooperation with international educational organisations, invite recognised experts from India and abroad, and develop high-quality teaching materials, lectures and courses for business and government professionals for interested targeted audience by entering into suitable memorandum of understanding.