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NEW DELHI: Chartered accountants body ICAI on Saturday served a showcause notice on auditor and asked it to submit balance sheets of Satyam Computer audited by it in the last five years.

“We today served showcause notice on Price Waterhouse and asked it to reply within 21 days,” Institute of Chartered Accountants of India (ICAI) President Ved Jain said.

If the reply to the notice does not come by 21 days, all members of Price Waterhouse who audited the Saytam accounts could be banned for life time, Jain said.

The firm has also been asked to submit balance sheets, financial statements and other relevant documents of Satyam Computer audited by it for the last five years, he said.

The audit firm has maintained that it followed applicable audit standards and went by audit evidence provided by the company.

The ICAI President said action against CAs, who audited the accounts of Satyam Computer, can be expected in 2-3 months, if found guilty.

However, the institute cannot take action against the firm, he said.

Jain said the institute would expedite the process this time as the amendment of the Chartered Accountants Act in 2006 has enabled ICAI to accelerate the proceedings.

CAs found either negligent or party to the fraud could face a life-time ban on practising, Jain said.

The institute has taken action against 122 CAs for various kinds of irregularities in the last three years with one of them even being barred for life time, he said.

Jain said Satyam founder Ramalinga Raju’s statement that only he knew about the financial wrong-doings did not look like the whole truth, as he did not write the accounts of his company.

Ramalinga Raju in a letter written to the company board admitted, “…None of the board members, past or present, had any knowledge of the situation in which the company is placed.”

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KOLKATA: The Institute of Chartered Accountants of India (ICAI) has decided to issue a show cause notice to the auditors of Satyam Computer Services in the backdrop of Satyam Computers chairman B Ramalinga Raju’s sensational revelations on Wednesday.

Talking to ET, ICAI president Ved Jain said: “We have set the ball rolling. On the basis of statements made by Mr Ramalinga Raju, ICAI has already initiated proceedings against the concerned auditor. Under legal provisions our disciplinary committee can take cognizance of information from external sources and initiate action against our members. On the basis of the statement, a show cause notice will be sent to the auditor of the Satyam Computer Services.”

Asked specifically, who the notice was being sent to, Mr Jain said: “I am told the audit firm was PricewaterhouseCoopers. A show cause notice will soon be sent to the auditor. This is indeed a situation where fingers are being pointed towards some chartered accountants.”

On the issue, an ICAI council member who declined to be named said: “As auditors, we definitely have a role to play. This incident gives the entire chartered accountants fraternity a bad name. If we unravel any wrong doings on the part of the auditors, the institute (ICAI) will initiate action against the concerned auditor. Auditors base their observations on documentary evidence provided to auditors and Mr Raju did not mention that the figures provided to auditors were wrong. However, if the auditors have failed, the institute will file an ‘Information Case’ against the concerned individual (at PwC, in this case) as a first step.”

The ICAI’s Council is a core team that deals with critical aspects of running the Institute and policy matters involved as well as various accounting norms.

Experience, however, shows the process of ruling on such cases takes time. For instance, ICAI had initiated proceddings against the auditors of the erstwhile Global Trust Bank (GTB) a couple of years ago. The case is yet to be diposed off, the council member said.

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