India Bars Global Audit Firm PwC for 2 Years in a Decade-Old $1 Bln Fraud Case
The Securities and Exchange Board of India said that PwC was complicit with the main perpetrators of the accounting fraud at Satyam Computer Services nine years ago, and it was found that audit firm did not comply with the auditing standards and norms.
New Delhi (Sputnik) — India’s market regulator, the Securities and Exchange Board of India (SEBI), has imposed a two year ban on global accountancy firm Price Waterhouse (PwC) from auditing listed companies in the country after it failed to check irregularities in a $1.7 billion auditing fraud at the defunct Satyam Computer Services.
In an unprecedented 108-page order, which stems from the Satyam scandal of January 2009, SEBI bars a total of 11 entities that operate under the PwC umbrella: two PwC entities in Bangalore; two in Calcutta; two in Delhi and one in Chennai; Lovelock and Lewes affiliates in Hyderabad and Mumbai; and two Dalal & Shah firms in Mumbai and Ahmedabad from auditing listed companies in India.
The order comes into force with immediate effect. However, to avoid operational difficulties, SEBI has not stopped the ongoing assignment of PwC India.
“For removal of operational difficulties, this order will not impact audit assignments relating to the financial year 2017-18 undertaken by the firms forming part of the PwC network,” SEBI said.
SEBI also ordered PwC, Bangalore and two of its erstwhile partners to jointly forfeit “wrongful gains” of about $2.06 million plus interest within 45 days.
The Satyam fraud, one of the biggest financial frauds in the country, came to the fore in the year 2009, when its’s founder Ramalinga Raju admitted and confessed before market regulator SEBI about large-scale financial manipulations in the account books of Satyam Computer Service Ltd. The Satyam promoters inflated revenue and profits to showcase a healthy picture of the company when PwC was its auditor. Raju was sentenced to a seven year jail term in 2015 in connection with the fraud, along with other executives responsible for the fraud.
Meanwhile, PwC is hopeful of taking a stay on the SEBI order.”The SEBI order relates to a fraud that took place nearly a decade ago in which we played no part and had no knowledge of,” Price Waterhouse said in a release.
“There has been no intentional wrongdoing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary,” said Price Waterhouse, adding it was confident of getting a court to stay the order before it becomes effective.