Published: Fri, January 12, 2018
People | By Leon Thompson

Accountancy firm Price Waterhouse banned from India

Accountancy firm Price Waterhouse banned from India

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.

Price Waterhouse said it would appeal against the ban, which came nine years after Satyam founder B. Ramalinga Raju confessed to cooking the firm's books in a Rs7,136 crore fraud.

Mumbai: Market regulator Sebi has barred PricewaterhouseCoopers from issuing any audit certificate to any listed company in the country for a period of two years.

Price Waterhouse said in a statement, "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".

While making it clear that it will appeal against the Sebi order next week, Price Waterhouse (PW) also comforted around 3,000 auditors, saying that it will take care of their interest and there was no reason to worry.

One of the world's top accounting firms has been banned from auditing listed companies in India for two years.

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In a 108-page report, the Securities and Exchange Board of India wrote that PwC had neglected to check "glaring anomalies" in the financial details reported by Satyam, whose downfall followed one of the worst financial scandals in Indian corporate history. In 2009 too, the firm had filed a consent plea with Sebi which was rejected by the regulatory body. This move came after a probe into a almost decade-old accounting fraud case in a software services company that became India's biggest corporate scandal. "If auditing is not meant to detect a $1 billion fraud, I wonder what it is for".

Sebi said the order would come into force with immediate effect.

"We have, however, learned the lessons of Satyam and invested heavily over the last nine years in building a robust and high-quality audit practice".

The top management of Satyam Computer Services dressed up their accounts, balance sheets and profit margins to show a rosy picture of the company, in an effort to get more investments from the public. "Though a two-year ban seems a bit harsh, it could deter the Big Four firms from expanding in India and affect their momentum", said Amarjeet Chopra, former president of the Institute of Chartered Accountants of India.

PW was also complacent on not effectively implementing the accounting standards that laid considerable importance on effectiveness of internal audit and the need for an external audit to place trust on internal audit for collaborating, increased coverage and optimal usage of time. "Sebi order bars PwC from listed space so if read literally and theoretically it could impact PwC's insolvency work on listed companies, but practically the two are different businesses".

The court allowed the regulator to proceed with its investigations if it is able to prove that PWC had a role in the fraud. SEBI then filed an appeal in the Supreme Court against the SAT order in 2012.

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