Satyam scam

This refers to the article, “When the dog did not bark” (Jan. 16). Dogs do bark by giving qualified audit reports when the masters flout accounting policies and fail to comply with standards in the annual statement compiled by the company and presented to the board of directors and then for certification by the statutory auditors. There are many court decisions on cases when auditors are made victims while the offences are committed by their clients. Surely, Satyam Computers would have filed the annual audited accounts and the funds flow statements in the past 10 years, along with the directors’ reports, year-wise, with the Securities and Exchange Board of India, the Registrar of Companies and the Income Tax Department. On the basis of these records, let the investigating teams appointed by the Central government come to their independent conclusion on the magnitude of the scam and the culprits involved. T. Ramaswamy, Chennai * * * Even in the audit of a small panchayat or municipality — whose income ranges between Rs. 500000 and Rs. 5000000 — auditors check directly with banks and satisfy themselves about the correctness of the scrolls supplied by the institutions. But not so in the case of Satyam, which has been audited by highly qualified professionals from a reputed international firm. There may be a sleeping partner; but not a sleeping director. Satyam’s directors, rather than looking for inconsistencies in trends, stayed content with the luxury the post entailed with all its attendant perks. All the watchdog agencies, including the Institute of Chartered Accountants of India, should find ways to check such frauds in future. S. Nallasivan, Tirunelveli * * * The article rightly pointed out the imperative of relying on fool-proof verification instead of blindly continuing with the procedures that depend solely on trust and good faith. There is absolute truth in it when it hints at the possibility of the receding stock markets uncovering a few more Satyams. K.D. Viswanaathan, Coimbatore * * * Apart from the failure of the regulatory authorities, directors and auditors to verify the Satyam management’s version beyond doubt, the following points are still unanswered The CB CID’s swift action in seizing the company’s documents; political interest to cover up the issue, and not allowing SEBI to interrogate Ramalinga Raju. Why not SEBI re-audit the working results and financial position of big corporates at random every now and then and bring out the fallacies, if any? S. Balasubramanian, Chennai * * * The author has beautifully summed up the implications of and the remedial action needed to prevent scams of Satyam magnitude by pointing to the feudal business culture of the top managements. The practice of creating larger than life images of corporates by the media, especially the visual media, needs to be shunned. Structural changes are needed in the rules governing the auditing fraternity. There should be no role for the top management in their appointment. But is this possible in a system where top corporate honchos are pampered into anointing future Prime Ministers? Kasim Sait, Chennai * * * The article does not address the fundamental issues in the auditing process in India. The methodology of auditing must not be under the purview of the ICAI, which is an association of interested parties. The process should instead be well-defined and regulated by an independent body. Auditors affiliated to the ICAI need to file their reports with this independent body to be sample-checked like IT returns. The role of SEBI also needs to be redefined. Simplifying the Satyam episode as an ethical issue of one person or organisation will not help. Meting out stringent punishments will not prevent a repetition. Redefining the regulatory processes is the need of the hour. The dog did not bark because it could not see, nor hear, nor smell effectively. Balajee Rajaram, Chennai * * * The claim of the statutory auditors that they relied on the statements of the company executives is astounding and is like a policeman saying in the court that he relied on the criminal! C.V. Subbaraman, Ahmedabad * * * It is indeed laudable that the new Satyam board is not seeking any bailout package. Otherwise, it will send a wrong signal and set a bad precedent that precious tax-payers’ money is being doled out to fund the losses arising from frauds perpetrated by promoters. To overcome any short term liquidity problem, the government may arrange loans from banks against the security of receivables by providing guarantee, if necessary. If the ongoing investigations find that the promoters have siphoned off funds, the government should take measures for the recovery of the amount. M. Satyanarayana, Coimbatore