Arjun: Bhagwan, what kind of justice are you doing to innocent people? They are made to suffer always.
Shrikrishna: My dear Arjun, what happened? What’s on your mind?
Arjun: See, these banks sanction and disburse loans to any person against stocks, book debts and so on.
Shrikrishna: Yes, that is their business.
Arjun: Agreed. But they do not appraise the proposal properly. They may even act in collusion with the borrower. And finally, when the loan becomes an NPA, they just pass on the blame to the auditors.
Shrikrishna: How can they do that? Do you mean to say that your CAs do the job properly and still they are made to suffer?
Arjun: Precisely.
Shrikrishna: Tell me, how?
Arjun: See, what happens is the banks grant a loan for working capital. Then they appoint CA firms to do the stock audit. They ask the CAs to certify the stock values, book debts, loans, vehicles and what not.
Shrikrishna: What is unusual about that? It’s normal. It’s a part of your profession.
Arjun: Yes, Bhagwan. But quite often there are fraudulent transactions in large borrower companies. Stock records are not proper, there are multiple locations, there is no reconciliation, sales are inflated, debtors are bogus, vehicles are not properly registered, they are hypothecated to many banks…
Shrikrishna: Enough, enough! These are common problems. But what’s your problem? You have to verify and certify.
Arjun: True. But there are practical problems, managements of borrower companies do not co-operate, they conceal the details, data is not made available, the time given is very short, the fees are too low, and…
Shrikrishna: I know all this, Arjun. But it is for this task that you are appointed.
Arjun: How can we certify without proper data?
Shrikrishna: Then say clearly in the certificate that the data is not proper and inadequate and hence you can’t certify. Simple!
Arjun: Bhagwan, how can we give such a negative and harsh certificate? How shall we then get clients?
Shrikrishna: So, you want to somehow accommodate the client! For that, you are willing to compromise your principles and risk your degree?
Arjun: These bankers are funny! They complain that based on our certificate they renewed their working capital facility. But in fact they have already sanctioned or renewed it. And they pass the blame on to the CAs.
Shrikrishna: Arjun, yours is a responsible profession. You are expected to work without fear or favour. How can you certify something as true and correct unless you are objectively satisfied about it?
Arjun: Yes, in principle that is right. But in practice…
Shrikrishna: You cannot take the excuse of ‘practicality’… This is clearly gross negligence as well as lack of due diligence.
Arjun: But then what should we do?
Shrikrishna: Simple, follow the basics. Apply your common sense. Don’t rely only on financial books of accounts. You need to see beyond that. Learn to read between the lines. Have professional scepticism. Maintain working papers. Try to get third party evidence. Ask questions, create a record of your work. Remember, ‘Work should not only be done, but it should be seen that it is done!’
Arjun: Enough, enough! Followed. In short, the quality of work should be absolute regardless of fees. Right?
Shrikrishna: In fact, first understand the value of work, of your signature yourself. Only then will others recognise it. Don’t allow others to take you for granted. Now, Arjun, please don’t tell me that if you refuse to certify, some other CA will do it. I have no answer to this argument.
Arjun: Bhagwan, like in the Bhagvad Geeta, you have opened my eyes again today. Do keep on meeting me and guiding me, always.
Om Shanti
(This dialogue is based on the need for due diligence while certifying stocks, etc.)
