The IL&FS Fallout: Deloitte faces heat over unethical audits
The Ministry of Corporate Affairs may debar Deloitte, the Global Audit Giant, over allegations of financial misconduct and fraud in the IL&FS financial meltdown.
The Serious Frauds Investigation Office (SFIO) was alerted by a whistle-blower within Deloitte. The whistle-blower alleged:
On its part, Deloitte has refuted the charges.
Previous Big 5 Audit Scam : Price Waterhouse gets 2-year ban in Satyam case: It may be recalled, in 2018, SEBI banned global auditing firm Price Waterhouse from auditing listed companies in India for two years for its alleged role of collusion with the directors and employees of erstwhile Satyam Computer Services.
Compliance Takeaway: An external auditor must be stringent in reporting lapses. An audit firm that can be “managed” with hefty fees, gratuities and can be persuaded to change unfavourable audit reports to favourable ones, spell impending trouble for the company. The MCA has notified that Directors & senior functionaries cannot be absolved from frauds & economic offences by resigning from the services of the company & shall face prosecution & punishment. The IL&FS, Satyam and Chanda Kochhar ICICI Bank cases should lead India Inc. to urgently review its Ethic & Compliance program and conduct stringent training for executives across the board.
More Ethics Issues for Cognizant: After $28 mil SEC fine, now Pension Fund Sues Cognizant
After a $28 million SEC fine in the Indian Bribery Case, Cognizant has now been sued by a small-sized US pension fund under allegations of misleading shareholders about audits concerning anti-corruption practises.
The suit claims that Cognizant’s management refrained from taking adequate measures to protect the company, as mandated by the US Foreign Corrupt Practices Act.
The suit also alleges that Cognizant had wastefully repurchased shares at higher prices, leading to illegal enrichment of certain Executives to the tune of about $80 million as “unlawful insider trading proceeds by selling shares of their personal Cognizant stock based on adverse, material non-public information.”
Compliance Takeaway: Is your company’s Ethics & Compliance Training effective? Why aren’t executive getting the message despite so many high-profile companies & senior executives getting in the dock?