RBI should come out with norms for verifying bank a/cs: SFIO

New Delhi, May 8: The Serious Fraud Investigation Office in its report on the Satyam fraud has suggested that the RBI should come out with definite guidelines for banks to issue balance confirmation certificates (BCC), to help auditors verify company accounts.
"(The) RBI may examine this (the procedure for issuing BCC) and issue necessary guidelines to ensure that forged balance confirmation certificates are not used for perpetration of fraud," the investigation arm of the Corporate Affairs Ministry said.

In case of Satyam, the statutory auditor Price Waterhouse relied on forged balance confirmation certificates produced by the Satyam management to certify accounts of the IT company.

The SFIO report further added that the auditors did not make any enquiry to ascertain the factual position on outstanding balance in current accounts and fixed deposits as required under ICAI directives.

"The... Lapse on the part of statutory auditors has enabled the Satyam executives to perpetrate a massive fraud, as it was noticed that... Many of the balance confirmation certificates were fake and forged," the report said.

Satyam, under disgraced founder B Ramalinga Raju, relied on forged fixed deposit receipts and bank accounts to present a rosy picture of the company. The company even paid taxes on interest on non-existing fixed deposits. PTI