STORY OF THE GLORY

It is very nice to hear a speaker
at a conference describe ours as a ‘glorious’ profession! But what is the
reality? Here is an interesting (and frightening) true story.

A very big bank lent rupees one
thousand crores to a company. The bank had a ‘positive’ name. But there was a
scandal in the company. The bank had given huge advances to many such
companies. The bank went into deep trouble and the negative side of the
positive bank was exposed in the media. The bank’s high-profile CMD was
arrested. Many were put behind bars.

As usual, the question asked in the
public was ‘What was the auditor doing?’ As if the auditor is sitting
in the company the whole day and managing it!? It is the tradition in the
banking sector to make the auditor of the borrower a scapegoat regardless of
the person who may be at fault. The bank filed a complaint of professional
misconduct with the ICAI. Although ICAI is aware of the scandals in the banks
and the motivation behind such complaints, it has no choice but to entertain
such complaints. The reason is, it is a ‘glorious’ profession!

It was later revealed that the
auditor had signed the correct financial statements, made disclosures and
maintained good working papers. However, the borrower company had manipulated
the audited statements by masking certain figures and adverse observations and
qualifications. A photocopy which was not signed by the auditor was presented
to the bank for the loan. And since the bank was ‘positive’ it sanctioned the
loan of Rs. 1,000 crores. Please don’t ask stupid questions such as why did the
bank not insist on original signed statements, why it did not verify them in
the public domain, and so on. As per the banking norms, such questions are to
be asked only to small borrowers of Rs. 5 lakhs. If you want Rs. 1,000 crores,
the processing is very ‘simple’ and quick – on ‘a fast track’.

The poor auditor, despite doing a
fairly good job, was dragged into the investigations. Needless to say, he never
received his fees. On top of it, he has to face inquiries by CBI, SFIO, EOW,
etc., etc.

The poor auditor is made to visit
the investigators’ offices every day, answer the same questions, spend on his
lawyers’ fees, conveyance, humongous paperwork and what not. Everyone is
puzzled why the auditor carried out the audit properly and gave a qualified
report. Everybody feels that he could have given a clean report and shared some
Rs. 25 crores from the loan. He could have had a share in that sum!

And the beauty is that in the
inquiry, on some very technical grounds, the auditor may be held guilty of
professional misconduct. In other words, the auditor is the only person who
really suffers. The huge scam, the fraudulent people around, all that is irrelevant.
The reason is that ‘ours is a dignified and respectable profession’. Hence,
vulnerable.

Friends,
this is the common story of the ‘glory’ of our profession.