Banking and market regulators are taking into consideration a proposal to authorize auditors to straightforwardly verify financial information of their clients with banks where they hold accounts, a source said.
At present, rules of the Institute of Chartered Accounts of India require auditors to actually verify the cash and bank balances of companies they audit, and not merely rely on statements provided by the company secretary or the chief financial officer. However, at present banks are not obliged legally to share such information with auditors.
Auditors of Satyam Computer had not verified bank account statements and fixed deposit certificates of the company with the respective banks, which lead to the Rs 7,000-crore accounting fraud. The IT firm supplied wrong information to its auditors about available cash balances by forging the letterhead of one of its banks.
At present, rules of the Institute of Chartered Accounts of India require auditors to actually verify the cash and bank balances of companies they audit, and not merely rely on statements provided by the company secretary or the chief financial officer. However, at present banks are not obliged legally to share such information with auditors.
Auditors of Satyam Computer had not verified bank account statements and fixed deposit certificates of the company with the respective banks, which lead to the Rs 7,000-crore accounting fraud. The IT firm supplied wrong information to its auditors about available cash balances by forging the letterhead of one of its banks.
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