satyam lesson - 2

The second lesson that we see is that the DCA and the government has had no difficulty in appointing the entire board. so why not just extend it and make it a process - ALL INDEPENDENT DIRECTORS TO BE APPOINTED BY THE SEBI or DCA or both as the case may be.

satyam lesson -1

The current satyam fiasco has simple solutions but are the stakeholders intrested in a clean up of the system ?

first the solution:"ALL COMPANIES THAT ARE LISTED, HAVE BORROWINGS FROM BANKS IN EXCESS OF 20% OF THEIR NETWORTH(OR SOME SIMILAR LIMIT) - THE AUDITORS HAVE TO BE APPOINTED BY THE COMPTROLLER AND AUDITOR GENERAL (CAG) OF INDIA."

Now lets look at the stakeholders:

company managements - they will obviously not like it as the new auditor will be less likey to be sympathetic to their point of view regarding what constitutes "business expediency".
audit firms - as they will lose out on so called "lucrative clients"
Now on the topic of lucrative - audit firms should not also offer consulting services as the desire to consult will obviously reduce the independence of the auditor as he tries to cosy up to managements to get these consulting gigs.

shareholders/ lenders - click on the following link to vote on the above two proposals. http://www.surveymonkey.com/s.aspx?sm=W_2bWR3aeOf5INjadt21z8Hg_3d_3d