Audit all Big 5 firms for internal workings
I see Mr. Mishra's post on KPMG's corruption on recruiting favours in exchange for business. Deloitte and EY were external auditors for Punjab National Bank. PWC helped Satyam orchestrate its fraud.
Isn't it time for us to demand a detailed audit of these big 5 firms?
Where I feel they could easily be unethical?
1) Facilitating bribery to Govt officials via 3rd party accounting professionals. Govt officials need to be paid 5 lakhs in bribe. A local CA gives a bill to big 5 for 7 lakhs for professional services, cuts taxes and pays bribe to govt.
2) Partners and senior officials at big 5 have opportunities to make money by overlooking stuff in audits
3) Selection of vendors - as they are primary point in many govt contracts, staff at these firms can easily have discretion in rfps, vendor selection and could be bribed for the same.
I think there are several other areas that u may know of...
Isn't it time for us to demand a detailed audit of these big 5 firms?
Where I feel they could easily be unethical?
1) Facilitating bribery to Govt officials via 3rd party accounting professionals. Govt officials need to be paid 5 lakhs in bribe. A local CA gives a bill to big 5 for 7 lakhs for professional services, cuts taxes and pays bribe to govt.
2) Partners and senior officials at big 5 have opportunities to make money by overlooking stuff in audits
3) Selection of vendors - as they are primary point in many govt contracts, staff at these firms can easily have discretion in rfps, vendor selection and could be bribed for the same.
I think there are several other areas that u may know of...
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Many American firms have a strict SOP against bribing due to US laws but many things in kind are acceptable.Foremost is giving internships and jobs to sons/daughters of politicians/bureaucrats/bankers for such favours. Another is hospitality when the persons travel on vacation.
Feb 28
It is a farce that the external auditors thoroughly audit a firm for their complete profit and loss account. Any organisation choose a firm only if they are amenable to their way of working. The top brass meet and decide the contract. The working professional demand certain privileges and get them by many ways. Then the total account formalities are discussed by the two CEOs and final action decided. In this they decide so many things and submit their proposal to Government. Final outcome is known.
Feb 26
In India, Govt. means CORRUPTION. The function of the Govt. is to stop all wrongdoing through its organization, now to the contrary Govt. has become the biggest breeding ground of CORRUPTION. Unless a total withdrawal of Govt. from all kinds of commercial activities take place, there will not be any justice to people. Over the years, the Govt. has become biggest roadblock for development of the country.
Feb 26
I couldn't agree more. How does the bank lend loans to these firms/cos? The project report is setup by the local CA who takes a cut of between 4-6% of the loan, who in turns pays the bank officials from 0.5 to 1% of the loan amount. In most of these cases you have relative of the bureaucrat/politician who facilitates the loan either directly or indirectly and then takes a percentage cut again. Look at the NPAs of the banks will tell you story of how these loans stand. What happens when the auditing firm audits the bank books? Usually the firm brings out the list of observations and objections found during an audit. Some of the auditors may catch the lapses but usually these are discussed with the bank officials and then removed from the list of objections. Secondly most of the auditors do not have domain knowledge of banking systems. So there is a problem. This systemic and corruption so ingrained into the system that it is difficult unless we bring laws like the Chinese.
Feb 26
Yes, of course. There should be time bound detailed investigation to see that things are above board. Severe action including disqualification should be used of found guilty.
Feb 26
