India’s Ministry of Corporate Affairs (MCA)
has ruled out independently appointed peer reviews of listed
company audits, a proposal that was mooted in the wake of the
Satyam fraud, due to a lack of available talent.
Capital markets regulator Securities and
Exchange Board of India (SEBI) and the government originally
flagged the idea of appointing auditors to provide a second opinion
to audits of 30 Bombay Stock Exchange and 50 National Stock
ICAI sources claimed the government was unable
to find enough trained auditors with 10-15 years of experience to
carry out the work.
“It is now decided that the audit reports will
be vetted by a panel of auditors appointed by the financial
advisory board of the Institute of Chartered Accountants of
(ICAI), only for cases where any
irregularities are found or regulatory or supervisory need requires
a second opinion,” MCA officials said.
Under the original proposal, regulators would
have appointed independent auditors to carry out the work. This
included the Reserve Bank of India dealing with bank audits, SEBI
appointing auditors to listed companies and the Insurance
Regulatory and Development Authority dealing with insurance
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The Satyam Computer Services scandal unfolded
in January 2009, when financial irregularities totalling about
$1.44 billion were discovered at the Indian software company.
Price Waterhouse, an Indian affiliate firm of
PricewaterhouseCoopers (PwC), was Satyam’s statutory auditor at the
time the irregularities allegedly took place. Satyam has
subsequently ditched Price Waterhouse as its auditor.