Today morning during car pool discussion, I noticed two very huge flaws in Indian Financial system. So I thought to write them down for general feedback and comments. Also, my friends who are abroad can throw more light on how things happen there
1. The Auditors are appointed by organisations and their term can end any day
While remembering PWC-Satyam incidence, I thought who is to blame. Is PWC the real culprit or the system itself. When Mr Raju would have asked Satyam to do those fudging, what options do they had. If auditors actually audit accounts of Indian companies, they would be appointed auditors anymore. So the major work of auditors is to cook your books in compliance with legal and statutory obligations which they did.
2. Anyone can deposit money in your account:
people and I used to wonder why and how someone would exploit this. I need protection that no one should be able to withdraw my money, who cares if someone deposits by mistake.
But actually this deposit can have more serious consequences as government is bothered more about deposits than with drawls in your account. So If I deposit Rs 10 lakhs in your account, you can safely in IT net for next 5 years or may be more. The bigger the amount, the more is the trouble.
If I remember few scenes from movie, Guru, this was a strategy adopted by Guru in a very effective way. Be it pressurizing the IAS officer or the minister, always a threat of huge deposit was given to them.
Can anyone throw some more light on this
2 comments:
DETECTION OF FRAUDS AND ERRORS IS NOT THE WORK OF THE AUDITORS BUT WHEN THE CASH BALANCE IS HIGH THE AUDITOR HAS THE POWER TO SHOW CASH
yes, anyone can deposit funds in to anyone's account; however, you of course can't have any information about the account such as the balance and withdraw of money.
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