Do not blame auditors alone for frauds: PwC

Davos: Asserting that good corporate governance is a collective responsibility, global consulting and auditing giant PwC has said auditors alone should not be blamed for corporate frauds. Two partners of PwC`s Indian member firm PriceWaterhouse have been accused of negligence in detecting the multi-million dollar accounting fraud at Satyam that was confessed by founder-chairman B Ramalinga Raju in January 2008. Ever since, auditors` role has come under greater public scrutiny.

"The corporate governance should not be confused with only the failure at auditor`s end," PricewaterhouseCoopers India Chairman Deepak Kapoor told PTI here at the sidelines of the World Economic Forum (WEF) annual meeting. He said there are at least four pillars to the story of corporate governance. "First, there is management and the promoters, there are independent directors, then there are internal auditors and then come the outside auditors.

"The management would have to first follow good corporate practices, then independent directors would have to be independent in the essence and it needs to be made sure that internal auditors do not report to the management or promoters, but to an audit committee," he said. Kapoor said it was more about the ethics and value system that a company or a corporate group maintains.

Satyam Computer Services, now Mahindra Satyam, has filed a suit in a Hyderabad court against its former Board of Directors, certain employees and the company`s audit firm PwC seeking damages for allegedly perpetrating fraud. Mahindra Satyam Chairman Vineet Nayyar, who was also here at the forum, said it is high time for the former auditors, management and owners to pay up for their past misdeeds.

PwC too has filed a suit against former chairman of Satyam B Ramalinga Raju and others claiming damages of Rs 100 crore for "deliberately" concealing key information that led to the accounting fraud.