Thanks for your comment. I will admit I have never been to India but I am well aware of the culture and the challenges you must face. In fact, much of the interest and ongoing encouragement to me to continue writing about Satyam has come from Indians both in India and in the US. They really want to see the story read and critiqued outside of India in order to escape the “level of corruption that is acceptable under a contemporary standard” that hampers an objective look at it in India.

The bottom line is that Satyam was listed on the NYSE and issued ADRs to US and other investors. For that reason, the standard must be higher or else the company must be prohibited from participating in the US stock market and keep their corrupt activities in India.

Once Satyam both decided to list on the NYSE and to use a firm like Price Waterhouse as their accountants, a member firm and an important business unit of a global accounting firm, they were playing in a much bigger league. This bigger league sets additional expectations and higher standards than that which you as a legacy accountant in India unfortunately have to put up with every day.

Perhaps Gopal and the other partners took on the money losing Satyam audit becasue there was other money in it, as I have hypothesized in a later post. Think about it. http://retheauditors.com/2009/05/26/how-satyam-supported-pwcs-schizophrenic-strategy-to-reenter-the-systems-integration-business/

Speaking of cultural differences…”Typically the partners of the firm are very conservative and many times would marry there sons and daughters in families which have a long tradition in public accounting therefore creating a more and more refined gene pool of public accountants who go on to serve the firm.”
Developing a super gene pool of future accountants by selectively intermarrying the top accountants in the US is something that had not occurred to me as a potential solution to our crisis here. I will have to discuss that one over a beer with Dennis Howlett. http://www.accmanpro.com

Francine

Which basically means the auditors are left the unenviable job of making a subjective judgement of what level of corruption is OK under a contemporary standard. The second aspect is that audit fee in India is very low the audit fee for Satyam a $2billion dollar is US$700K try to aggregate what the salary cost of the audit team on Satyam would have been in a year and you will come to a conclusion that the firm was incurring a huge financial loss on the audit every year. So the reason maybe some of the old partners were asked to continue is that they are the only folks who are ready to take the risk of assuming the attest risk of a large listed company without really getting fully paid for assuming such a tremendous assurance risk..

Basically it seems to be that the blog has been written based on some western value sets or assumption without realising the business context or setting in which the audit failure happened…maybe the reason gopal was the signing partner was because he was on the board of ICAI for 12 yrs and considered to be technically very sound and maybe the best qualified to be a signing partner of a complex audit..

Thanks for your comment. I would add…PwC International effectively kicked the tainted firm out of their network, the firm where their partners had been indicted. In signing up another firm to the network, neither the “PwC” partners who moved there, nor the other Big 4 wanted anything to do with the clients that had been audited by the former PwC firm. Most of the staff went to the other Big 3 firms in Japan, and PwC begged them to take them. PwC in Japan audit is now a distant number 4 from being number 1 prior to the scandal. Which is why they are trying to build up their advisory practice with the purchase of BearingPoint Japan.
Francine