What happened in Satyam and lessons for auditors

Charges against PW• 135 “control deficiencies” identified in the integrated audit conductedin accordance with the standards of the Public Company AccountingOversight Board. Auditors “did not bring these controlled deficienciesto the notice of audit committee and thereby, facilitated thecontinuance of the fraudulent practices unabated.”• Information technology report stated: IT systems in Satyam were subject tomanipulation. It was also suggested that, given these deficiencies, substantial andelaborate examination of financials should be done.• Auditors “deliberately did not make any extensive changes in the audit plan, whichclearly establishes his motives and intentions in allowing the fraudulent practicesto continue.”• Auditors received certificates of deposit from Satyam’s banks that were in “greatvariance with the figures provided by the company’s management” but signed offthe fudged accounts• Auditors compensated through “exorbitant audit fee” of Rs 3.67 crore in 2006‐07and Rs 3.73 crore in 2007‐08. In comparison, the audit fee paid by Wipro andInfosys in 2007‐08 was Rs 1.1 crore and Rs 83 lakh, respectively