PwC banned from auditing listed companies for two years over Satyam Scam

PwC banned from auditing listed companies for two years over Satyam Scam

Late Wednesday evening, Sebi had banned the PW Network from engaging in audit work with any listed company for two years, starting April 2018. A major player in the auditing space, Price Waterhouse has a total of 11 network firms and employs around 3,000 people in India, reports the PTI.

"Listed companies and intermediaries registered with Sebi shall not engage any firm forming part of the PW network for issuing any certificate with respect to compliance of statutory obligations which Sebi is competent to administer and enforce, under various laws for a period of two years", Sebi said in its 108-page order.

"We are disappointed with the findings of the SEBI investigations and the adjudication order. we are confident of getting a stay before this order becomes effective", PwC said in a statement. "The SEBI order relates to a fraud that took place almost a decade ago in which we played no part and had no knowledge of", a spokesperson at the accounting firm said, Reuters reported.

Price Waterhouse Bangalore and its two erstwhile partners - S Gopalakrishnan and Srinivas Talluri - have been ordered to return the wrongful gains of Rs 13,09,01,664 with interest at the rate of 12 percent per annum for nine years within 45 days of the issuance of the order.

Price Waterhouse had earlier approached the Supreme Court challenging Sebi's jurisdiction over auditors. It needs to be seen whether it would benefit the smaller firms or not, he added.

The decision responds to a fraud perpetuated by Satyam Computer Services and discovered in 2009 which is often compared to the US Enron scandal. In 2012, Satyam was sold to rival Tech Mahindra which dropped the brand.

As per the regulator, an auditor needs to proceed with the audit with an attitude of professional scepticism, and not get swayed by "one's (company) reputation during the critical process of evaluation".

The order related to a fraud that took place almost a decade ago in which it played no part and had no knowledge of, it said.

Ramalinga Raju, founder and former chairman of the erstwhile software services exporter Satyam Computer Services, stunned Indian markets and investors in January 2009, when he admitted that the firm had overstated earnings and assets for several years, in a fraud of more than $1 billion sometimes referred to as "India's Enron".

In a 108-page statement, SEBI said that the manner in which various entities bearing the PwC name had been registered in India in a "nebulous way", made it hard not to take notice of the "loss of faith of the investors in the brand name".

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