CHENNAI - Perhaps for the first time in the Indian corporate history, an audit firm - and a foreign one at that - is being dumped midway by a company.

The government-appointed new board for Satyam Computer Services has declared that the fraud-hit IT bellwether will have a new audit firm to restate the books of accounts.

Given the investor's mood against PriceWaterhouse (auditing firm of Satyam) and its rub-off effect on other foreign audit firms operating in India, there is a strong possibility of an Indian firm getting the mandate, said experts.

'Ninety-nine percent the new mandate will be given to a reputed Indian audit firm,' R.G. Rajan, a city based auditor, told IANS.

'It is now established that the foreign audit firms are not worthy of shareholders' trust. The firms are beyond the Indian law. The Satyam board should now appoint only an Indian firm and there are many reputed firms in the country,' S. Gurumurthy, auditor and noted commentator, told IANS.

Agreeing with him, another senior auditor on condition of anonymity told IANS: 'Foreign audit firms have commonality of interests. In the present case only a reputed Indian audit firm can infuse investor confidence of the true and fair view of accounts.'

'It is the domestic industry that should be faulted for the roaring business that the foreign audit firms have here,' he added.

While auditing textbooks describe an auditor as merely a watchdog and not a bloodhound, Gurumurthy says the new auditors for Satyam will not be the latter.

Categorically saying that he would decline if the assignment is offered to his firm, Gurumurthy said, 'The new auditor will look at how fictitious assets were created and the mode of approval given. One has to see the roles of individuals - whose role to do what.'

Meanwhile, it will be interesting to note how Satyam removes PriceWaterhouse as per the Company Law an auditor will hold office from the annual general meeting (AGM) to another AGM.

Citing Section 224 (7) of Indian Companies Act, Rajan said, the company can call an extraordinary general meeting for removing the auditors with the permission of the central government.

Given the magnitude of the fraud (Rs.70 billion) at Satyam committed by the duping duo - former chairman B. Ramalinga Raju and his brother B. Rama Raju - the central government's sanction will be easy.

This will come into play only if PriceWaterhouse does not resign, he added.