Statutory auditors must own responsibility: Karnik

NEW DELHI, INDIA: The chairman of the Government-appointed Board of Satyam, Kiran Karnik, has called for more self regulation by industry, rotation of statutory auditors, and a framework for appointment of ‘truly’ independent directors to protect the interests of the small shareholders.

Karnik said this in an interaction with NASSCOM Chairman Pramod Bhasin after receiving the 'Dataquest IT Persons of the Year 2009' award for steering the fraud-hit Satyam early this year.

Asked if following these suggestions would see the end of similar frauds in the corporate sector in the country, Karnik said that even though a fraud of this scale may not surface in the foreseeable future, there were several skeletons lurking in the cupboards of the Indian companies.

Karnik praised the role of the Government of India in taking a series of actions that led to the protection of the image of the Indian IT services industry. He also singled out the role played by the motivated workforce at Satyam in focusing on the customers during this crisis, which led to most customers staying on with the company.

He decried the practice of statutory auditors shrugging off their responsibility through a simple ‘disclaimer’. This, he said, must stop forthwith.

Karnik also advocated the good governance practice of getting an external auditor to handle the internal audit function.