The Securities and Exchange Board of India (Sebi) will soon appoint an independent auditor to review the accounts prepared by the Satyam's statutory auditor -- Price Waterhouse.

In addition, the government proposes to use powers vested with it under section 233 of the Companies Act to appoint an independent auditor once the new board, comprising its nominees, is in place. According to the action plan drawn up, this move will follow the findings of the Sebi report, official sources said.

The sources also said that Price Waterhouse is barred from acting as one of the auditors for the peer review of the accounts of the Sensex and Nifty companies till the time the investigation report comes.

For the peer review, Sebi, in consultation with the corporate affairs ministry, may appoint new auditors. The markets regulator proposes to rotate the audit of such companies among the existing auditors of the Nifty and Sensex companies. The auditors will, however, get to look into the accounts of companies in sectors other than those being audited by them to avoid any potential conflict of interest.

The authorities are not particularly enthused about the Institute of Chartered Accountants of India's move to only investigate the partners of Price Waterhouse and not the firm. They said that the institute, which is also regulator for audit professionals, has announced standards such as "auditing and assurance standard" that has been now renamed as "Engagement and Quality Control Standard".

Specifically, the standard on quality control (SQC-1) specifies the quality control for the firm that performs the audits and review of historical financial information and related services engagements. It establishes the standards and provides guidance on a firms responsibilities for its system of quality control for audits and review.

Under this, the firm should establish a system of quality control to ensure that the entity and its personnel comply with professional stands, regulatory and legal requirements and the reports issued by the firm and the engagement partner are appropriate in the circumstances. So, the responsibility is on the firm as well as the partner, officials said.

Moreover, since the ICAI is the regulatory body for the audit and accountancy professionals, it does not need any complaint from an investigative authority to deal with the audit firm or its partners.

It is the responsibility of the institute to be proactive in clearing the image of professional chartered accountancy firms which are engaged in auditing Indian companies and are thus accountable to the common shareholders who depend on the data to look at the fundamentals of companies, said a source.