PwC barred from auditing India listed firms for two years

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These companies would soon be required to look for new auditors in the wake of the SEBI order even though the regulator has made it clear that the ruling would not impact audit assignments relating to the financial year 2017-18 undertaken by the PW network firms.

The Satyam scam arose when Ramalinga Raju, founder of the erstwhile Satyam Computer Services Ltd, admitted that he had padded the books of the software services giant for several years by nearly Rs 7,000 crore.

Matters related to Satyam were also looked into by USA regulators as PwC is also a listed company in the American market.

Meanwhile, PW, on Thursday, said there has been no intentional wrongdoing by its firms in the Satyam case and also expressed confidence of getting a stay on the SEBI order.

In its order, SEBI said while PwC's "loose-knit network arrangement" enabled partner firms to derive the advantage of its global brand value but did not lay down any supervisory mechanisms to check the quality of the performance of the firms.

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In its order, the SEBI, on Wednesday said any entities or firms practicing as chartered accountants in India under the brand and banner of PwC, shall not directly or indirectly issue any certificate of audit of listed companies, or their intermediaries that are registered with the regulator for a period of two years.

In addition to barring PwC, Sebi has also ordered PwC and its two erstwhile partners who worked on the Satyam audit to pay Rs 130.9 million, along with interest at 12 per cent per annum from January 2009 on account of wrongful gains. It needs to be seen whether it would benefit the smaller firms or not, he added. Of this, Rs 13.09 crore was paid to PW Bangalore for Satyam's audit.

The auditors did not act upon the whistle blower's letter warning them about company's bank balances being inflated and also failed to respond which a prudent auditor would have done on sudden exposure of fraud.

The scam came to light in January 2009 after Satyam Computers then chairman B Ramalinga Raju admitted to large scale financial manipulations in the companys books of accounts.

Satyam, which was bought by Indian IT firm Tech Mahindra in an auction in 2010, and PricewaterhouseCoopers agreed in 2011 to pay a combined $17.5 million to settle USA probes into the fraud. The public had no reason to believe that the audit reports were false and misleading. SEBI announced the ban in connection with the role of Price Waterhouse (PW) in the Rs 8,000-crore Satyam scam of 2009.

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