Accounting regulator,Institute of Chartered Accountants of India (ICAI) has claimed Price Waterhouse auditors for Satyam scandal were given fake documents by the company management. President of ICAI,Uttam Prakash Agarwal said he was informed by the deposed CFO of Satyam,Srinivas Vadlamani,that the fake papers were prepared with the consent the companys then management including former chairman B Ramalinga Raju and his brother,who was a member of the board of directors B Rama Raju. Agarwal told FE,The two auditors have claimed that they are innocent and have not done anything wrong. Infact,Vadlamani has also accepted that the two auditors were given fake documents which did not reflect the true picture of the company. This also allegedly included papers to show inflated profits which never existed. ICAI got the permission from the local court in Hyderabad to examine and record the statements of the two ex-auditors of Satyam and the company CFO in Chanchalguda jail in the city. The Rs 7,800-crore accounting fraud at Satyam has been the largest ever such case in Indian corporate history. The reveleations by Ramalinga Raju of the fraud sent the stock markets crashing,raised questions on the Indian IT success story and forced the government to intervene to set up a nominated board chaired by Nasscom president Kiran Karnik which is now working on bids to acquire a majority stake in the firm. The ICAI president had earlier said the auditors would be interrogated mainly on accounting and auditing aspects and to check whether they followed the right methods of accounting. Sirnivas also allegedly told the two-member ICAI team that the fraud in the company balance sheets was going on for the last four-five years. Vadlamani Srinivas,according to Agarwal,told the ICAI team that he did everything to support the management. The alleged masterminds behind the scam were Ramalinga Raju and his brother. He (Vadlamani Srinivas) told us the auditors have no role in the scam. All Fixed Deposit receipts and bank statements were provided by one G Ramakrishna who was heading the cost accountancy department of the company,under the direction of (Ramalinga) Raju, Agarwal said. These papers in turn,were produced before the two external auditors - S Gopalakrishnan and Srinivas Talluri. Both of them told the ICAI team that they were innocent and had no role in fudging books of accounts of Satyam. The auditors also told the ICAI team that they relied on the documents provided by the management and internal documents of the company,and followed the accounting procedures prescribed by the Institute. The deposition by the former CFO of Indias fourth largest IT company is expected to bolster the position of PriceWaterhouseCoopers,which has been slammed for apparently lax auditing of the firms fraud over the years. Agarwal however said the committee had made no decision on the role of auditors so far. We will put the record before the ICAI committee soon. V Srinivas also acknowledged that Raju was forced to make the confession on January 7 in his letter to Sebi after investment banker DSP Merrill Lynch too pointed out discrepancies in the books of accounts of Satyam. Among other things,he also pointed out that the company did have 54,000 employees. When asked about the other issue on AS- 11, ICAI said that the AS-11 breather given by the ministry of corporate affairs will not be applicable for the non-corporates which means that they will continue to show losses or gains incurring on account of the foreign exchange transactions in the P&L account.
