Monday, August 31, 2009

Are we preparing CAs or White Collar Criminals in the name of CA education from ICAI?

Dear Friends,
The Satyam scam, remained in news for a pretty long time. Govt. of India immediately swung in to action and fingers were pointed out at Auditors and they were to face legal action. A board was constituted to ensure that the organisation doesn't go bankrupt as it would have given a jolt to the Indian Companies abroad where lot of money was invested in these and similar organisations. So positive news followed, good returns were shown and every thing has been brought to order. Story forgotten, No lessons learnt by Govt. of India!
But I think the CAs and the companies must have learnt some lessons so that they become more careful in future and devise more foolproof ways that they never get caught! If still they fail, we might have another such scandal soon sometimes later!
This is precisely because our government believes in adhoc arrangements and firefighting and do not want to get in to the correction mode. Now whether it is because, it serves the purposes of those in Govt. or those vested interest who are an inherent part of government through their affiliation to the powers those be, But the fact is that no efforts have been made by any authority to get deep in to this malady of "Forging Accounts".
“FINANCE” is the back-bone of economy of this world. Also, “FINANCE” is intricate for most people and very few persons can understand it, what to think of controlling it.“FINANCE” is a subject which affects each one of us, in fact every sector, section and people of this great country.
So, A Student Entering into CA Curriculum also dreams of bringing awareness about “FINANCE” and it’s “Management and Control” among people of India, among the corporate in which he dreams to get employed and thereby contributing to the progress of India. BUT the reality is perhaps not this!
During my recent advocacy work, I came across a student of CA(Final) Mr. Chirag Sawant who was trying to expose this malady and I was indeed amazed as to how deep rooted this issue was. Perhaps it is the only professional course that has no full time classes and yet the whole financial sector is managed by such professionals. In the name of training, the CA(under training) are attached to CA Firms who treat the students like bonded labour for the time they are under them. Slavery, drudgery and what not follows!
On my further inquiries and research, I realised, most CA students had similar story to tell and they suffered in silence! And what they learnt in these firms is not how to make and keep financial records but how to serve the interest of their masters/employers by fudging the accounts books, making wrong entries and records to show something that doesn't exists - with the sole purpose to benefit those for whom they work- of course a criminal act.
Ordinarily any employee would do that for his master and to save his job. But when it comes to Professionals in the area of finance, the gravity of such actions /inactions become very serious!
Professionals are governed by Ethics, but here it seems they are trained to be unethical right in their formative years.
On my further inquiry, I learnt form the CA students that typically, as soon as any student is enrolled into Article-ship under any practicing CA i.e. the member of The ICAI, the student is sent for auditing the books to the place of clients of that CA. Here, he learns to check arithmetical errors and vouching the books. Gradually he is taught by the member of The ICAI to guide their clients to make entries in the proper Accounting Head in their books.
This is where, the process of criminal education starts!. As the time passes, he is trained to make Fake Balance Sheets, Fake Vouchers, Fake Entries Etc. many time against his wish and will - just for the sake of his education. At the end of 5 Long Years of Article-ship (including Extended Period Leave by the student), the good and innocent brain is washed completely and A Sophisticated White Collar Criminal is Produced under the name of Education !
This is how we are leading to scams like Satyam and I hope all of you will agree that there are many more Satyams existing but have not been unearthed! If Government of India is really serious about this malady, this has to be nipped in the bud. Else any amount of rules, regulations and laws will not work. The system of education of ICAI needs to be investigated, regulated, and supervised as the first step and how urgent it is can be gauged by the impact that Satyam scam brought on Indian Economy.
And ICAI on its part should check its own system of education rather than forming committees one after the other to prepare reports on the conduct of S Gopalakrishnan and Talluri Srinivas - the Auditors of Price Waterhouse. ICAI has to address issues of failure of adherence to accounting practices, corporate governance, role of independent directors etc right in their training modules and the unethical way the CAs are being trained.

SC Vashishth, Advocate

PS: I am thankful to Mr. Chirag Sawant and many other CA students who shared their personal experiences, plight and brought this malady to my information.

ICAI to dig deeper in to Satyam, Buysiness Standard, 29 Aug 09

BS Reporter / Hyderabad August 30, 2009, 0:31 IST

The Institute of Chartered Accountants of India (ICAI), the regulatory body for chartered accountants in the country, is now making a second and final report on the role of the auditors in the massive accounting fraud at Satyam Computer Services, now called Mahindra Satyam.

This is the second investigation by ICAI. It had submitted the first report along with its recommendations to the ministry of corporate affairs last month. The second report is expected to go deeper into the matter and look at all new facts that may have come up.

Speaking to the media here on Saturday, ICAI President Uttam Prakash Agarwal said that a high-powered disciplinary committee will shortly visit Hyderabad to study issues related to failure of adherence to accounting practices, corporate governance, role of independent directors and other stakeholders in the Satyam case.

He declined a give a deadline within which the investigation will be completed but indicated it could be February next year when his term as the president will end. The report from the committee will once again be submitted to the ministry for further action against the auditors.

The ICAI president declined to say what kind of action it will recommend to the chartered accountants who audited the Satyam accounts if proven guilty. The Satyam auditors were S Gopalakrishnan and Talluri Srinivas of Price Waterhouse.

Agarwal said that Gopalakrishnan was stripped of all non-standing committee posts two weeks ago. However, he will continue to serve as a member as it was not in the jurisdiction of the ICAI president to remove members from their posts, he added.

ICAI, in the wake of the Satyam fraud, had asked all its members to look for external evidence before certifying the accounting statements to ensure that similar incidents do not recur.


1 comment:

  1. we can file writ petition because it is affected group of people i.e. ca students and and their career .
    for example m.c.mehta filed petition for some group of people and our environment. that is refernce for us.
    if i am right reply me...


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