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ICAI says KPMG can't audit, but...

January 16, 2009

Chartered accountants regulator ICAI on Thursday said KMPG cannot audit Satyam's books, but the global auditor said it does not require to register with the regulator to restate the IT company's accounts.

"KPMG is not allowed to practice in India... they are not registered with us," ICAI president Ved Jain said, while cautioning scam-tainted Satyam against going ahead with this auditor.

Satyam's new board has mandated KPMG and Deloitte to restate the company's financial statements, after founder Ramalinga Raju admitted cooking of accounts to inflate profits and create fictitious assets.

Reacting to ICAI's caveat, KPMG said: "It is our understanding that the scope of work (at Satyam) to be finalised is not reserved for CAs registered with the Institute of Chartered Accountants of India."

"We are working with the new board of Satyam Computer. The scope of work and terms of reference are being discussed with a view to their finalisation," a KPMG spokesperson said.

KPMG and Deloitte were brought in yesterday even as Satyam's bookkeeper Price Waterhouse said that its audit of the IT company's accounts may be unreliable given Raju's admission of a financial fraud running into thousands of crores of rupees.

Asked if ICAI had formally communicated its view on KPMG to Satyam board, Jain said: "We have not written to them."

ICAI, which is seeking explanation from Price Waterhouse on its auditing of Satyam for over eight years, said that "KPMG can't be the auditor. We are making it clear that any representation to be made by KPMG to Satyam board cannot be done.

"Satyam board should be aware that it's not appointing KPMG and it's appointing BSR Associates, which is its Indian arm... on the basis of credential of a local firm, the board should not apply its mind."

Asked about the role of the local arm - BSR Associates, the KPMG spokesperson declined to comment.

Incidentally, BSR and Company is the statutory auditor of Infosys.

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    Text: PTI

    Image: KPMG building in Mountain View in California.

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