DailyPost 2286
KPMG ASSURANCE AND CONSULTING SERVICES LLP (KPMG India) SETTLEMENT
Given the topsy turvy financial world the present audit has created financial state where it would be safe to say, that the business world and investor fraternity is moving on very thin ice. The ice is getting thinner by the day. Only on Dec. 13, 2022 John Ray told the U.S. House Committee that FTX practiced ”no bookkeeping.” It is also said than $32 billion valuation company could manage its existence without any audit worth its name. Can the businesses manage both accounts and audit at their whims and fancies, if they decide to do so, unabashedly, with regulators being broadly bystanders?
We had FTX yesterday, we have a KMPG the next day, failing knowingly in their mandated legal obligations, albeit with a design. The regularity of such events speaks volumes about it becoming the practice. If you have grown up with this and perfected the art, you wouldn’t even get scared. Then normative has changed. India’s does not stop even chide them and the life goes on, to the misery of the investing public and variety of the not so powerful and ignorant stakeholders, who have to pay through their nose, or end up losing their life’s earnings.
Close on the heels of ICICI and Videocon, the famed auditor KPMG India, settled a proceeding with US Public Company Accounting Oversight Board (PCAOB) with the monetary penalty of $1 million. PCAOB which audits public companies was extremely critical of its functioning. KPMG India and the engagement partner Sagar P Lakhani were pulled up for quality control failures, supervisory failures and documentation failures. This was while working with a public company in 2017. Additionally, Mr. Lakhani was slapped a penalty of $75,000. He was suspended from associating with registered public accounting firm for one year.
The audit firm is instructed to ”undertake and certify the completion of certain improvements to its system of quality control” systems. This is not the first time for the Big Four in India. Such remarks, indictments and valid aspersions by regulatory authorities in number of countries, have made no dent in their functioning. In the infamous Satyam case, PCOAB, the same regulator, settled a penalty of $1.5 million. This is was in addition to $6 million imposed by Securities Exchanged Commission, SEC, on five firms of PricewaterhouseCoopers International, PWC, in India. There is lot of work which needs to be done by Indian regulators starting from where PCOAB has left. National Financial Reporting Authority, NFRA, took some aggressive action to start with, but has not reached anywhere near of taking the bull by its horns. The trade union approach by these organizations have forestalled any long lasting proactive or positive action in this field. Large number of forensic audits being ordered stands a testimony to this rot.
TILL THE TIME AUDITORS ARE NOT AUDITED, WHAT THEY SIGN LEGALLY WILL CONTINUE TO BE GOD’S WORD.
Sanjay Sahay