Amid mounting criticism of the failure of auditors to detect the scam at Punjab National Bank (PNB), the Institute of Chartered Accountants of India (ICAI) has taken statements from a general manager of the bank’s western zone, and has issued notices to all the central statutory auditors of the crisis-ridden bank. The apex body of chartered accountants has also set up a panel to look into the PNB fraud and also suggest remedial measures. The first meeting of the panel took place on February 23. “The officers of PNB were called by the ICAI to appear and produce copy of all related documents in the said fraud. The officers of PNB were called by ICAI to appear and produce copy of all related documents in the said frauds. GM (Western Zone), PNB, appeared and made his statement in Mumbai,” the ICAI said in a statement. It also wrote to Sebi, CBI, Enforcement Directorate and PNB on February 15, urging them to share details of the fraud, including copies of specific findings in respect of the involvement of any CA or such audit firms, it said.
PNB’s central statutory auditors are Suri & Company, SPMG & Company, MKPS & Associates, GS Mathur & Company and HDSG & Associates. The appointments of such auditors of banks are cleared by the central bank. Hitting out at auditors for their failure to detect the scam at PNB, which had been going on since 2011, finance and corporate affairs minister Arun Jaitley last week said both internal and external auditors were looking the other way when the fraud was taking place. “I am sure the profession of chartered accountant itself, and those who control the discipline of the profession, will start introspecting and say what legitimate actions are to be taken.” The ICAI has also written to the Reserve Bank of India, requesting it to provide the list of the corporate borrowers of public sector banks with outstanding loans of Rs 2000 crore and above “so as to have the same examined by Financial Reporting Review Board of the ICAI for any possible violation of applicable standards of accounting as well as auditing”, it said in the statement.
Separately, the ICAI has also requested its parent ministry (corporate affairs ministry) “to prevail upon Sebi, CBI, ED and PNB to share their findings with ICAI to enable it to accelerate action against any Chartered Accountant who has played any role in this fraud”, it said. Auditors has come under serious government scrutiny and heightened public glare in recent years, thanks to their connivance with fraudsters or inability to detect large-scale financial wrongdoing in cases ranging from Satyam to the latest PNB fraud.