The Satyam fiasco is going to leave many mutual fund houses red-faced . A host of mutual fund houses such as Franklin, HDFC, HSBC, Fidelity among others have holdings in the defamed information technology company.
However, unlike many hapless investors they have already been selling stock for some time now. Most fund houses maintained that they have been selling the stock since the trouble started or even before that and their holding is significantly lower or nill in some cases as on December.
Some also claimed that since they place emphasis on diversification, they never went overboard on one company.
“We started selling Satyam stocks ever since the Maytas deal was announced. Today, our holding is substantially lower, it would be less than 1%,” says U K Sinha, chairman, UTI. “This is a wake-up call for the authorities. The time has come for co-ordinated and concerted efforts to make sure these kind of things shouldn’t happen anymore,” he adds.
“As a long-term fund manager, we have strong risk management controls which ensure that there is adequate diversification in the portfolio with negligible concentration risk at any point in time. With assets under management of around Rs 28,000 crore, our exposure to Satyam as a percentage of our portfolio is insignificant as of now,” says a senior official at ICICI Prudential Life Insurance Company .
“This certainly is an unprecedented event. It is paramount for us to protect the interests of our stakeholders, and we are evaluating all possible options along with other institutional shareholders to maximise the value for our stakeholders,” he added.
“Wherever we have a substantial stake, we are mostly on board of those firms. So, we are aware of what is happening and also we ensure that the independent directors are auditors of top quality,” says a senior LIC official. nancial services sector. One can make a mistake but two audit firms can’t make it.” PWC, it is been reliably learnt, has been Satyam’s auditor for almost nine years.
A partner at a domestic chartered accountancy firm said that the underline problem is the basic relationship between auditors and management, where they trust the management too much and take things on face value. The satyam issue highlights that the auditor has not followed even the routine procedures and standards. Like the inflated cash balance on Satyam’s books, if the auditor had physically verified the same, matters wouldn’t have reached this extent.
“This is major eye opener and would bring into renewed and critical focus role of auditors in Satyam” said Suresh Surana, founder of RSM Astute Consulting group. TNN
MUMBAI/BANGALORE: The Satyam fiasco has put the spotlight on the role of external auditors in a company. Industry experts say that the governing body of chartered accountants, Institute of Chartered Accountants of India, should review the guidelines for audit firms.
Said a council member of ICAI, “There should be a rotation of auditors once in three years as this would restrict the association of a particular audit firm with a company for a long time.” Another independent chartered accountant said, “Like in France and Denmark, in India too it should become mandatory for a joint audit, especially in listed companies, where the onus would be both the auditors rather than one like in the case of PricewaterhouseCoopers in Satyam.
However, unlike many hapless investors they have already been selling stock for some time now. Most fund houses maintained that they have been selling the stock since the trouble started or even before that and their holding is significantly lower or nill in some cases as on December.
Some also claimed that since they place emphasis on diversification, they never went overboard on one company.
“We started selling Satyam stocks ever since the Maytas deal was announced. Today, our holding is substantially lower, it would be less than 1%,” says U K Sinha, chairman, UTI. “This is a wake-up call for the authorities. The time has come for co-ordinated and concerted efforts to make sure these kind of things shouldn’t happen anymore,” he adds.
“As a long-term fund manager, we have strong risk management controls which ensure that there is adequate diversification in the portfolio with negligible concentration risk at any point in time. With assets under management of around Rs 28,000 crore, our exposure to Satyam as a percentage of our portfolio is insignificant as of now,” says a senior official at ICICI Prudential Life Insurance Company .
“This certainly is an unprecedented event. It is paramount for us to protect the interests of our stakeholders, and we are evaluating all possible options along with other institutional shareholders to maximise the value for our stakeholders,” he added.
“Wherever we have a substantial stake, we are mostly on board of those firms. So, we are aware of what is happening and also we ensure that the independent directors are auditors of top quality,” says a senior LIC official. nancial services sector. One can make a mistake but two audit firms can’t make it.” PWC, it is been reliably learnt, has been Satyam’s auditor for almost nine years.
A partner at a domestic chartered accountancy firm said that the underline problem is the basic relationship between auditors and management, where they trust the management too much and take things on face value. The satyam issue highlights that the auditor has not followed even the routine procedures and standards. Like the inflated cash balance on Satyam’s books, if the auditor had physically verified the same, matters wouldn’t have reached this extent.
“This is major eye opener and would bring into renewed and critical focus role of auditors in Satyam” said Suresh Surana, founder of RSM Astute Consulting group. TNN
MUMBAI/BANGALORE: The Satyam fiasco has put the spotlight on the role of external auditors in a company. Industry experts say that the governing body of chartered accountants, Institute of Chartered Accountants of India, should review the guidelines for audit firms.
Said a council member of ICAI, “There should be a rotation of auditors once in three years as this would restrict the association of a particular audit firm with a company for a long time.” Another independent chartered accountant said, “Like in France and Denmark, in India too it should become mandatory for a joint audit, especially in listed companies, where the onus would be both the auditors rather than one like in the case of PricewaterhouseCoopers in Satyam.
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