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Copy of Copy of Tata

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Sofie Jansson

on 23 September 2013

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Transcript of Copy of Copy of Tata

Case Summary
Tata Finance

(cc) photo by Metro Centric on Flickr
(cc) photo by Franco Folini on Flickr
(cc) photo by jimmyharris on Flickr
(cc) photo by Metro Centric on Flickr
Suppose that an accounting firm in the United States
was retained to complete an engagement similar to the
one performed by AFF for the Tata Group. What
professional standards would be relevant to such an engagement? How do the latter standards differ, if at all,
from those that apply to the performance of an
independent audit?
Question 2
In your opinion, why do you believe that Y. M. Kales
chose not to comment publicly on the controversy that surrounded the retraction of the AFF report on the Tata Finance accounting scandal and his subsequent dismissal
by AFF? Did he have an ethical or moral responsibility not to comment on those matters?
Question 3
Report by A.F Ferguson & Company (AFF)
Details revealed to press

AFF retracted the report
2) Was it correct by AFF to accept the engagement to conduct the investigation
of Tata Finance Limited?
The Tata Group
1) How the independent auditors could miss the fraudulent transaction?

How we answered the questions in this case
India's largest business group
Good thoughts, good words, and good deeds
High level of ethics
Question 1
Understand the company & structure
Professional judgment (ICAS)
Principle 1 - all relevant information
Independence (Section 280 IFAC Code of Ethics)
Question 2
Consulting service
Standards to consider when consulting in America
Four general standards (Rule 201, AICPA Code of Professional Conduct)
Supplementary requirements for consultancy services (Rule 202, AICPA Code of Professional Conduct)
Differences between consulting service and independent audits
Question 3
Confidentiality (IESBA Code of Ethics for Professional Accountants)
Auditors should have a deeper understanding of the clients specific ethical, moral, or religious framework
Sofie Jansson
Agnes Wiberg
Company information

Question 1
Should the fact that a business entity or other organizations embraces a specific ethical,
moral, or religious framework be relevant in
designing and carrying out an audit of that organization?

Learning Outcomes
The Scandal
Problems in the Case
1) How could the
independent auditor
miss the fraudulent
Answers to main problems
2) Was it correct by AFF to accept the engagement to conduct the investigation of Tata Finance Limited?
The Scandal (cont.)
The Scandal (cont.)
Yes and No
More knowledge about corporate governance & culture
The importance of independence even in consultancy
The importance of confidentiality
Thanks for your attention!
Internal investigation of fraudulent transaction
Find the individuals responsible

Suspected Dilip Pendse "managing director"

Niskalp Investment & Trading company

Large investments in technology stocks

Lack of adequate equity capital
Senior executives hoped to clear their own names

Y.M. Kale senior partner of AFF

The report linked them to the fraud

Supported Dilip Pendse allegations

Criticized their corporate governance system
Dismissed partners and Y.M. Kale

Kale - scapegoat?

Pressure by Tata Group on AFF

Y.M. Kale refuse to comment publicly
Case summary
Answers to problems

Learning outcomes
Exceptions for disclosure is required

Professional Behavior (IESBA Code of Ethics for Professional Accountants)

Why Kale didn't comment on the scandal
Full transcript