Times of India: Blog: Monday, May
09, 2016.
As per the
documents posted on his twitter account, Dr. Kirit Somaiya, Honourable member
of Parliament wrote on March 21, 2016, amongst others, to the President of the Institute of
Chartered Accountants of India (ICAI)
insisting upon them to take strict action against the audit firms of Price Waterhouse Coopers
(PwC) network and others for their dubious role in various scams including Global Trust Bank,
Satyam and now Vijay Mallya/Kingfisher airlines/UB group scam.
Displaying
rare alacrity, Mr M Devaraja Reddy, President of ICAI, responded on the very
same day to the Honourable MP. The President of ICAI attempted to assuage the
apprehensions of the Honourable MP by assuring him that ICAI is seized of the
matter and is in the process of initiating action against the Statutory auditors
in the matter of Vijay Mallya Group including Kingfisher/UB.
In the normal
course, one should have taken this assertion at its face value. However, ICAI’ s response, on a recent query
under Right to Information Act, 2005
(RTI) by this author, let the cat out of the bag! Till about a week ago,
ICAI did not even know the names of the Statutory auditors, let alone evaluate
the merits of the case and take action against the allegedly guilty Auditors.
In his RTI
query dated March 22, 2016, this author had, amongst others requested ICAI to
provide him with the names of the Statutory Auditors of United Spirits Limited
(USL) during each of the financial years (FY) beginning from 2009 till 2015.
The Central Public Information Officer (CPIO) of ICAI vide his letter of April
27, 2016 replied, inter-alia, that “No such information is available with this
Public Authority.”….“It is informed that as per records the matter is under
preliminary investigation for seeking information from concerned authorities…” One can then only marvel at the audacity of
the President of ICAI in writing,
prima-facie, a rather misleading letter to none less than an Honourable member
of Indian Parliament. Will anyone hold ICAI accountable?
Was it only
the letter from the Honourable MP that had put the ICAI on notice. Certainly
not. Business Standard had reported, inter-alia, a year back in its article dated May 1, 2015
that ICAI will ask two auditors of USL to explain on what basis they certified
the financial accounts of the Company and failed to detect an alleged fund
diversion of Rs.2100 crores between 2010 and 2013. One of the auditors was an audit firm
belonging to the Pwc Network. Even a year later, as per its own admission, ICAI
had not cared to find out who the Auditors were, let along investigate the
matter. Yet it did not seem to think
twice in giving a baseless assurance to a member of Parliament.
Equally
disconcerting is the fact that the above referred article, as well as an
article dated April 29, 2015 in the Economic Times had highlighted, that USL
had 3 auditors in a space of 4 years.
This should have set the alarm bells ringing for ICAI as elaborated in
my blog of March 22, 2016. Evidently the noise was not enough to wake up the
sleeping beauty. Is it then surprising that ICAI President also concedes in his
letter that disciplinary proceedings against an audit firm of Pwc network
involved in the GTB scam during 2002-03 are yet to conclude despite strict
strictures from no less than a Joint Parliamentary committee.
Various
government bodies like the CBI, Enforcement Directorate, Debt Recovery
Tribunals, Bankers etc. are working overtime to bring the guilty to the book in
the case of Kingfisher airlines/UB group scam. And rightly so. An example needs
to be set. One would have expected ICAI, the regulator for the accounting and
auditing profession to take a lead role.
Alas, if only wishes could come true. ICAI is content in playing second
fiddle and adept at “passing the ball”.
This is borne
out of ICAI’s President’s above referred letter to the Honourable MP, where
stated, amongst others, that “As regards the matter relating to Vijay Mallya
Group including Kingfisher/UB, I wish to apprise you that ICAI is seized of the
matter and in regards to United Spirits Limited (USL) is in process of
obtaining relevant documents which point out diversion of funds of UB
subsidiaries and other group companies and thereby showing the role of
Statutory Auditors in a negative light. The ICAI has already written to
SEBI/other agencies for a copy of the forensic audit conducted in the matter
and the same is under examination for evaluating the role of auditors in the
whole matter. Similarly, in respect of
Kingfisher Airlines, the ICAI is in the process of obtaining the relevant Inspection
Reports from the Office of ROC, Karnataka and initiate action against the
Statutory Auditors in terms of disciplinary mechanism provided under the Act
and Rules framed there under.”
The above
attitude raises a number of uncomfortable questions: Why has ICAI, the subject
matter expert, not done an independent investigation so far despite the issue
being under immense public glare & scrutiny ? Why is it not willing to
disclose the name of the alleged defaulting auditors including the PwC network
audit firm and others? Didn’t ICAI’s President, prima-facie, mislead the
Honourable MP? Why does ICAI have double standards in reporting facts? Will
anyone hold ICAI, set up under a special act of the Parliament, accountable to
the public at large? Will we ever get any answers to these questions? Let’s
hope so.
.JPG)
.JPG)
