अगर तुम कहो
की हुसैन है सही
कर दिखाना वही
जो किया उसने
उठाओ अपना कलम
और खोलो अपना दिल
लिखो किसी धर्म के खिलाफ
जगा कर कलाकार
रहेकर यंह नब्बे साल
नहीं सिखा भारत का मान
काफी नहीं कलाकारी
शोभा डे गी सिर्फ कटारी
नहीं करना उपदेश
ये है भारत देश
नहीं करता किसकी छेड़
रहते यहाँ बिना भेद
Sunday, March 21, 2010
Monday, March 8, 2010
Open Letter to Mr. Azim Premji, Chairman, WIPRO
WHERE WERE AUDITORS? WE PROS WONDER!
(Open letter to Mr. Azim Premji, Chairman, Wipro)
Dear Sir,
One can imagine the thought process running into the minds of the Wipro management in general & you in particular regarding the misappropriation issue unearthed in the company. This once more, brings into focus the role of Auditors – External as well as Internal.
The current recession started with the collapse of the financial system in USA, one of the most advance countries which one looks forward to emulate. And it happens in the financial sector where the auditee has the cream of financial acumen at its disposal by way of employees that one would be jealous of. As the intention here is to deliberate on the role of Auditors, though size & materiality wise it is not comparable the Wipro case is referred to, being recent (the Satyam episode is not comparable as the Management itself is under clout). The deliberations in this article are, therefore, more of a generic nature.
The external environment especially with regard to the regulatory framework, as well as internal systems & capabilities within a company like Wipro are not second to anyone. This further enhances the need for this analysis.
Is the argument that External Audit does not cover system issues and that the same is the responsibility of Internal Auditors agreeable to Managements? Could this be the reason for noticing glaring loopholes existing in systems of companies running businesses for many years? This argument is time & again put forward inspite of the fact that Arthur Anderson paid the price in Enron case, PW has been pulled up in GTB case & again PW in Satyam case.
That Internal Audit is a different ball game as compared to External Audit is implicitly accepted by the External Auditors by shifting the responsibility of such misappropriations on Internal Audit. But carrying forward this thought process, the methodology advocated for Internal Audit by External Auditors is similar to the manner in which they carry out audit. For example, preparation of an annual audit plan is a mere guideline in the case of Internal Audit. Preparing it & further trying to monitor it, would adversely affect the functioning of the Internal Audit Department. To elaborate, when the internal auditor starts auditing a process, he/she is unsure as to whether it will take 1 day or 1 week. Because, whilst auditing, if he/she stumbles on a clue requiring checking in depth or the clue may lead to probable weakness in other department, it has to be cleared before concluding the audit. A good Auditor would be one who stumbles upon such clues and does a complete job as compared to the one who merely completes the job in allotted time. External or Organizational events such as starting or stopping an activity, joining or leaving of key employees in the company are important trigger events for Internal Audit which may require considerable departmental resources. These cannot be encompassed in an annual Internal Audit plan. Expecting adherence to the plan, will affect quality.
The reason why it has been mentioned that the difference in methodologies is implicitly accepted but not advocated accordingly is that firstly, external auditors are required to comment upon the adequacy of internal controls of which internal audit is an important part. Whilst commenting, the External Auditors, sticking to the Annual Plan example for the sake of brevity, invariably look at the Audit Plan and adherence to the same. Secondly, now it is required by the Institute of Internal Auditors, USA that once in 5 years the Internal Audit Departments should the pass the test of adequacy wherein similar requirements like the Audit Plan are primary criteria to give marks to the Internal Audit Departments. Thirdly, whenever, the External Audit firms carry out Internal Audit as part of outsourcing the function, the same is carried out in a ‘planned’ manner sticking to pre decided time table.
Due to the peculiar characteristics of the internal audit function, it is not advisable to outsource it. To give a radical example in an attempt to drive home the point, it is like a country outsourcing its Home Ministry function.
Wipro is known for its high standards in executing systems & procedures. It was only for this reason that it was felt that writing this letter could serve some purpose.
With Regards,
Vivek Mathker
(Open letter to Mr. Azim Premji, Chairman, Wipro)
Dear Sir,
One can imagine the thought process running into the minds of the Wipro management in general & you in particular regarding the misappropriation issue unearthed in the company. This once more, brings into focus the role of Auditors – External as well as Internal.
The current recession started with the collapse of the financial system in USA, one of the most advance countries which one looks forward to emulate. And it happens in the financial sector where the auditee has the cream of financial acumen at its disposal by way of employees that one would be jealous of. As the intention here is to deliberate on the role of Auditors, though size & materiality wise it is not comparable the Wipro case is referred to, being recent (the Satyam episode is not comparable as the Management itself is under clout). The deliberations in this article are, therefore, more of a generic nature.
The external environment especially with regard to the regulatory framework, as well as internal systems & capabilities within a company like Wipro are not second to anyone. This further enhances the need for this analysis.
Is the argument that External Audit does not cover system issues and that the same is the responsibility of Internal Auditors agreeable to Managements? Could this be the reason for noticing glaring loopholes existing in systems of companies running businesses for many years? This argument is time & again put forward inspite of the fact that Arthur Anderson paid the price in Enron case, PW has been pulled up in GTB case & again PW in Satyam case.
That Internal Audit is a different ball game as compared to External Audit is implicitly accepted by the External Auditors by shifting the responsibility of such misappropriations on Internal Audit. But carrying forward this thought process, the methodology advocated for Internal Audit by External Auditors is similar to the manner in which they carry out audit. For example, preparation of an annual audit plan is a mere guideline in the case of Internal Audit. Preparing it & further trying to monitor it, would adversely affect the functioning of the Internal Audit Department. To elaborate, when the internal auditor starts auditing a process, he/she is unsure as to whether it will take 1 day or 1 week. Because, whilst auditing, if he/she stumbles on a clue requiring checking in depth or the clue may lead to probable weakness in other department, it has to be cleared before concluding the audit. A good Auditor would be one who stumbles upon such clues and does a complete job as compared to the one who merely completes the job in allotted time. External or Organizational events such as starting or stopping an activity, joining or leaving of key employees in the company are important trigger events for Internal Audit which may require considerable departmental resources. These cannot be encompassed in an annual Internal Audit plan. Expecting adherence to the plan, will affect quality.
The reason why it has been mentioned that the difference in methodologies is implicitly accepted but not advocated accordingly is that firstly, external auditors are required to comment upon the adequacy of internal controls of which internal audit is an important part. Whilst commenting, the External Auditors, sticking to the Annual Plan example for the sake of brevity, invariably look at the Audit Plan and adherence to the same. Secondly, now it is required by the Institute of Internal Auditors, USA that once in 5 years the Internal Audit Departments should the pass the test of adequacy wherein similar requirements like the Audit Plan are primary criteria to give marks to the Internal Audit Departments. Thirdly, whenever, the External Audit firms carry out Internal Audit as part of outsourcing the function, the same is carried out in a ‘planned’ manner sticking to pre decided time table.
Due to the peculiar characteristics of the internal audit function, it is not advisable to outsource it. To give a radical example in an attempt to drive home the point, it is like a country outsourcing its Home Ministry function.
Wipro is known for its high standards in executing systems & procedures. It was only for this reason that it was felt that writing this letter could serve some purpose.
With Regards,
Vivek Mathker
Saturday, March 6, 2010
My Cabin
When I worked in Ion Exchange (India) Ltd in Mumbai, my office cabin overlooked the
Mahalaxmi Race course
When I worked for YK Almoayyed & Sons in Bahrain, my office cabin overlooked theWorld Trade Centre
Now I work for Sofinter (Ansaldo Caldaie) in Milan Italy & my office cabin overlooks theMonte Rosa, the 2nd highest point of Alps in Europe
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