KPMG has no auditing licence for India

The Institute of Chartered Acountants of India has reacted strongly to the appointment of KPMG as interim auditor to restate the accounts of the scam-hit Satyam Computers.

ICAI president Ved Jain says that KPMG is not registered with the institute and cannot practice in India. There is no reciprocal arrangement as Indian auditing firms are not recognised to take up work abroad, India also does not give recognition to foreign firms for doing auditing work in the country. However Deloitte was registered and thus free to undertake auditing assignments.

A KPMG spokesperson has said that the firm is working with the new board of Satyam Computers. The scope of work and terms of reference are being discussed to ensure a quick restatement of the IT firm's accounts.

KPMG added the scope of work to be finalised is not reserved for chartered accountants registered with the ICAI. The role of KPMG may be advisory rather than as statutory. In India, KPMG carries out its auditing work through an Indian firm, BSR & Co.

Deepak Parekh has said that the two firms, KPMG and Deloitte would submit their restated accounts in 8-12 weeks which could mean anywhere between second week of March to second week of April.

The committee appointed by ICAI is due to submit their report latest by 11 Febuary 2009.

The terms of reference of the committee are:

• To look into the entire gamut of the Satyam fiasco, including helping / coordination with the investigation being carried out by various agencies, going into    the roots of the problem, effectiveness of the system in place, systemic issues.
• To identify the root causes including the persons involved / associated with this issue.

To suggest change(s), wherever required, for the purpose of making appropriate recommendation(s) to the central government, SEBI and other regulators.