New Delhi: Satyam chairman Ramalinga Raju's letter incriminating himself of fraud and tainting the auditors with negligence or worse has been enough for Securities and Exchange Board of India (SEBI) to spring into action, but the Institute of Chartered Accountants of India (ICAI) says it cannot direct the auditors to explain themselves on the basis of that letter.
But the institute’s chairman of the disciplinary committee is collecting facts like the time of fraud to determine the auditors who might be involved, as it cannot take action against a firm, but only against individuals.
“We should issue a show cause notice next week,” President, ICAI, Ved Jain told CNN-IBN.
The ICAI has the powers of a court under the Chartered Accountants Act and can summon even non-members to testify and cross examine them. But in fast forwarding the action, it cannot short circuit due process.
For instance, it has to allow at least 21 days between show cause and reply. The process of collecting information, coordinating with various regulators and ministries, summoning witnesses and cross examining them can take many months, but the institute protests that it has not been wanting in meting out punishment.
“In the last three years, 122 chartered accountants have been punished. In one case, a license was been cancelled for lifetime,” Jain said.
The institute has the power to impose a fine of up to Rs 5 lakh and, in rare cases, as in the case of Mahesh Shah of Ahmedabad, even suspend for life the license to practice.
And contrary to the perception about professional guilds protecting their own, the institute says that its council meets about 10 times a year, and about half the time is spent in disciplinary proceedings.
The institute says it will proceed with speed but three years after the Global Trust Bank scandal, it is yet to conclude disciplinary action against Pricewaterhouse Coopers (PwC). A 2006 amendment to the Chartered Accountants Act, it says, will help abridge proceedings, but that remains a hope.