Rather than blaming auditors, the entire regulatory system must be cleaned from top to bottom

ZEE BUSINESS BEST B SCHOOL SURVEY

Skeletons in every cupboard

But then isn’t it the auditor’s responsibility to be the whistle-blower to the company’s wrongdoings? However, some say that book of accounts is the primary responsibility of the management and auditors merely audit the documents provided to them by the management and give their opinion based on accounts. If so, then why on earth does someone need an independent, external auditor?

‘Preface to Standards on Auditing’ available with the Institute of Chartered Accountants of India (ICAI), says very clearly, “It (auditing) is undertaken to enhance the degree of confidence of intended users in the financial statements.” It also adds, “In conducting an audit, the overall objective of the auditor is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement.”

Now considering the case of Satyam, some may say it was actually the responsibility of the management, but Ved Jain, President, ICAI counters that view, “It is impossible that a fraud of such magnitude would have escaped the auditor’s eyes.” This definitely raises a question mark on the prudence, competence and honesty of auditors operating in India.


Manish K. Pandey


For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).


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