Is Accountancy Firm to be Blamed for PNB Scam?

*You got it all wrong Mr. FM*

*_The Auditor does not have access to SWIFT Coding system_*

*_The Auditor cannot report on matters which are outside the Books of Accounts_*

*_The Auditor is not suppose to reconcile LOUs for which no sequence number is allotted and for

which no records are available_*

*_How can an Auditor verify entries and records which bypass the CBS system?_* 

*Dear Friends*,

Yesterday, the FM Mr. Jaitley has squarely blamed CA community for not performing their duties and

allowing the PNB like Scam to happen. This has seriously dented image of our Profession in the eyes

of Corporate World and Public at large. Being a Politician, he can speak anything and get away with it,

but it is time that we take this matter very seriously and respond to the FM explaining our stand on this

matter. I hope our council will take-up this matter with the FM and clarify its stand on the subject.

The FM has also mentioned that Govt., never interferes with the commercial business of PSBs, which

again is a wrong statement. Successive governments in India are responsible for making Political 

appointments in PSUs. I don't want to make it more political, as I would rather like to focus on my

profession only. However, it would be better if everyone reads a small write-up of an ex-banker :

"Directors of public sector banks: The ground reality".

The main reasons for Banking distress are following and it would be good if Auditors are not blamed

for the same:

1. Problems in the constitution of Bank Board Loan Committees

2. Political appointments in Bank Boards of PSBs

3. Evergreening of bad Loans

4. Rescheduling of defaulting loans

5. Funding without Margin or Collateral Security

6. Funding against assets like "Spectrum Allotments" (Airwaves) and Licences

7. Faulty Loan Appraisal system

8. Not having risk management system in place

9. Not doing regular end-use monitoring of Loans

10. Keeping Transactions outside the CBS system

11. Regularity issues, technology upgradation, employees' dissatisfaction, cyber threats etc.

The Bankers must learn to handle cases of Financial Crimes/distress and be extra-careful while

renewing limits, where delinquicies have already been reported in the past. No amount of money can

revive a business once it has completely failed or lost its credibility in the market. Otherwise, time and

again such events will keep happening and this country will lose hard-earned taxpayers money.

Needless to mention, once a fraud is committed and the perpetrator of crime has left the country, the

ball is squarely in the court of Govt. of the day to make recoveries and take appropriate legal

recourse. Blaming Auditors will certainly not help. If the FM wants to pass the buck on Auditors, best luck to him.