The problem within

“If you were to ask 10 people at PricewaterhouseCoopers what initially brought them to the firm, you might get 10 different answers. If you ask them what makes them stay, you tend to get one answer: the people. The people here are what differentiate us in the marketplace, help our clients succeed and, most importantly, make PwC a great place to work.”
—Posted on PwC’s India website under the career section

Indeed, it’s all about people, and more so in an accounting firm. Do the Big Four have enough of the right people? The Satyam fraud has once again brought the spotlight on the Big Four, with PricewaterhouseCoopers’ Indian arm acting against its own employees recently by suspending its Chief Relationship Partner S. Gopalakrishnan and Engagement Leader Srinivas Talluri, who audited the software major’s accounts. But whilst everybody is busy pointing fingers at the integrity of the auditors, the nub of the problem may lie somewhere else—in the auditing process, which needs a careful examination. That, many say, may be the weakest link in the entire auditing chain.

A section of chartered accountants (CAs) explains that auditing entails nothing but inspection of vouchers, checking ledger postings, physical verification of stockin-trade and assets, preparation of trial balance and reconciliation of a/c, besides discussion with the management.

“The job right up to the finalisation of accounts is done by junior auditors,” says an auditor from a local firm. Just like their home-grown counterparts, the Big Four, too, rely a lot on trainee CAs or those who have passed only their secondary examination to assist them in the auditing job.

A Big Four partner, on condition of anonymity, says the auditors today have limited time on their hands to complete an audit. For instance, the quarterly auditing of the books of large-sized corporations involves visits to multiple locations, offices and factories, many of them out of the country. Typically, an auditor gets a maximum of 10 days to complete the job. Often, a few of those days are spent in just travel.

Pressed for time, accountants, sometimes, just copy from the previous years’ audits and the internal audit. Seniors in the team are often—but not always—informed of this. So, because of shortage of time and talent, even a watchful audit firm can be subjected to a deceit.