An Absolutely Correct Balance Sheet is Impossible

To folks from the Humanities, your job seems such a bore. What excites you about auditing?
I have been in this business for 20 years. I don’t think that it is a bore at all. People who say so most likely don’t have any idea what it consists of.

To me, the rush comes from the fact that every year, I perform under an increasing amount of public scrutiny.

How many companies’ accounts actually present a true picture?
The word ‘true’ is very problematic and subtle. To have an absolutely correct balance statement is impossible. There are always different standpoints from which it can be viewed, and it should be fair to all parties. One must make sure that the point of view of the user of the balance sheet is taken into account.

What is the worst form of manipulation you have come across while auditing a company’s
accounts?
I have not come across any blatantly illegal financial statements. But there are areas where subjectivity can mar judgement, like when a valuation has to be done of a work in progress or stock or inventory valuation.

What is the most common malpractice?
I have only heard of goods going out of factories without an invoice, etc. but there is often a great deal of debate about what bracket of excise tax the business fits in.

What about hospitality offered to you when you go to a company as an external auditor? Did you accept them?
On the contrary, most big companies are extremely frugal — they offer just a basic meal every day. We get a great deal of respect, but no extravagant gifts.

Was the Satyam scandal a shock within auditing circles? Has it changed things?
No one had an idea that such shocking transactions were taking place. But I am a believer in the overall prudence of India Inc. I feel this was an aberration.

Things have become a lot more rigorous after Satyam. There is a new awareness of approach and method that has come in. There is more emphasis on documentation now.

Confidentiality is expected from auditors. How difficult is it to maintain?
This is something that is ingrained into the system right from the beginning. People are pulled up for talking loosely and not being careful about sensitive client information.

(As told to Divya Subramaniam)

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