A robber approached a policeman and requested him not to catch him when he steals. The policeman agreed ( for what cost - nobody knows ! ) and whenever complaint came he certified that the robber was innocent and correct in his dealings. Public lost heavily due to his robbery but it went unnoticed because of the policeman. One fine morning the robber went to the top floor of his house and cried on top of his voice that he has robbed.
Who is the culprit? The robber who robbed? The public who relied on the policeman that he will save them from theft ? or the Policeman who allowed the robber to swindle public money?
Read the above story with Ramalinga Raju as the robber, Price Waterhouse as the policeman and the stakeholders as the public.
Nodoubt the culprit is the policeman who allowed the robber to go scotfree. An auditor is a watchdog but not a bloodhound. Here is a story where a watchdog has become a bloodhound injuring and killing the investors.
Price Waterhouse is a member of Price Waterhouse Coopers. This firm was formed due to the merger of the firm Price Waterhouse and the firm Coopers & Lybrand ( after Sathyam debacle my pen wants to write their name as Coup ers and Lie Brand). This firm is one of the top 4 multinational auditing firms having international offices.
We came across an e-mail forward giving the facts about Price Waterhouse firms with the conclusion that Sathyam, GMR, Lanco etc have appointed a non existant firm as their auditors. For details visit www.ffip.hyderabad-india.info.
An auditor, once he is appointed as the statutory auditor of a company, has to file Form No.23B informing the Registrar of Companies of his/their appointment. Similarly the Company should also provide the details of auditors who signed the Balance Sheet of the Company by filing From 23AC with the Office of the Registrar of Companies. In both the forms, details of the name of the auditor, their address, their Permanent Account Number etc are to be given.
According to the e-mail forward it is ‘Pricewaterhouse Bangalore’ ( This is the name of the firm) who have filed Form 23B with ROC. In the above form, the permanent Account number of the firm ‘Pricewaterhouse Bangalore’ has been given.
But according to the AGM notice the resolution was only to appoint Price Waterhouse, Hyderabad as the statutory auditors of GMR Infra. In the AGM notice of Sathyam, the directors report clearly mentions that M/s Price Waterhouse, Chartered Accountants, Hyderabad retire at the AGM and are eligible for reappointment.
According to the register of firms, maintained by ICAI, wherein auditing firms are required to get their name approved and get registered with the Institute of Chartered Accountants of India (ICAI), Price Waterhouse do not have an office, either head office or branch, at Hyderabad. This implies that the shareholders of Sathyam and GMR have appointed a firm which is non existant, as their auditors.
‘Pricewaterhouse Bangalore’, though not appointed as auditors of GMR Infra or Sathyam have filed a wrong declaration in Form 23B claiming that they have been appointed as the auditors.
Knowing fully well that Price Waterhouse, Hyderabad has been appointed as their auditors ( whether this firm is existant or not is a different issue) as per the resolution passed by the shareholders, how can the company fill the name of ‘Pricewaterhouse Bangalore’ as their auditor. The Company Secretary of Sathyam/ GMR is answerable for this and liable for filing a misstatement.
ICAI gives registration number for each and every firm registered with it. No firm can practice in India without getting their name registered with ICAI. There are about 7 firms with more or less similar name ‘Price Waterhouse’ registered with ICAI.
1. PRICE WATERHOUSE (Firm No. 301112E)
2. PRICE WATERHOUSE (Firm No. 012754N)
3. PRICE WATERHOUSE & CO (Firm No.0500325)
4. PRICE WATERHOUSE & CO (Firm No.304026E)
5. PRICE WATERHOUSE & CO (Firm No.016844N)
6. PRICE WATERHOUSE & CO BANGALORE (Firm No.007567S)
7. PRICE WATERHOUSE BANGALORE (Firm No.007568S)
It can be seen that Shareholders of GMR Infra and Sathyam have appointed only Price Waterhouse, Hyderabad which is not in existance. Price waterhouse is different and distinct from Price Waterhouse Bangalore. Even assuming, for argument’s sake that price Waterhouse, Hyderabad is an existing firm how can the name of Price Waterhouse Bangalore, a totally different firm find place in Form 23B and Form 23AC ?
Will the ICAI or the Secretary of GMR Infra or the Secretary of Sathyam or anybody from Price Waterhouse group clarify on this point.
One thing is certain you cannot fool everybody everytime. Garbage in Garbage out. When ficticious firms are appointed as Auditors we can only expect fictitious Balance Sheets and fictitious Profit and Loss Accounts.
Suggestions to ICAI / Ministry of Corporate Affairs
1.Please make it mandatory to give the firm registration number of the proposed auditing firm in AGM notices.
2. Please make it mandatory that auditors give their report in their letter head with full address, firm registration number, phone No. etc and the Companies shall give all these particulars in the Audit report published in the Annual Report.
3. To avoid this type of frauds it is requested that no firm shall be allowed to practice in a name similar to an existing firm even with the consent of the exisiting firm. Exceptions shall be only for the persons practicing in his individual name as the firm name.
4. To take severe legal and disciplinary steps against Price Waterhouse group, Company secretary of GMR Infra and Sathyam for filing wrong statement with ROC.
5. Probit firms to have international brand names if such brand owner has any other establishment in India with the same name. Circumventing this shall be punished or plugged.
We have to learn from our mistakes or else our ignorance will put our country into chaos. Gandhiji got us freedom with hope India will be ruled only by Indians.
Let us not allow multinational companies and multinational auditors to rule us. Freedom once lost will never be regained because it is highly doubtful that we will have Gandhiji again.
Jai Hind.
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Jan 18, 2009 at 22:22:44
I welcome your suggestions. I came across an article in today’s newspaper that ROC has conducted an Inspection of Satyam’s books on Dec.17 and has reported the facts to the Ministry. had this been brought to the public notice, most of the investors could have avoided buying the satyam stock on the day of its big fall (7th Jan 2009). Any report/findings by ROCs or SEBI which may affect the investors interest has to be made public.