Satyam Scam: SEBI Bans PwC From Auditing Listed Firms For Two Years

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Thursday, January 11, 2018  09.28AM / TimesOfIndia 

In one of the most stringent orders passed by any regulator against a Big Four auditor, SEBI had on Wednesday found PwC guilty in the Satyam scam and barred its network entities from issuing audit certificates to any listed company in India for two years. 

Markets regulator Sebi on Wednesday banned global auditing firm Price Waterhouse Network from engaging in audit work with any listed company for two years starting April 2018 for its role in the Rs 8,000-crore Satyam scam that took place in 2009. 

The regulator also asked PW to pay Rs 13.09 crore, along with interest at 12% per annum from January 2009 (approximately Rs 14 crore). 

Two former PW partners, S Gopalakrishnan and Srinivas Talluri, have also been barred from issuing audit certificates to listed companies for three years. The two chartered accountants were responsible for auditing Satyam when the fraud came to light. 

Price Waterhouse Network is auditing arm of PWC India. 

"Listed companies and intermediaries registered with Sebi shall not engage any audit 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," the 108-page order said. This order could impact PW's audit business in India. The audit firm was yet to offer any statement at the time of going to press. 

The ban will come into effect from financial year 2018-19 and won't affect the auditing work for the year 2017-18. 

Late Wednesday evening, Price Waterhouse Network issued a statement saying, "We are disappointed with the findings of the Sebi investigations and the adjudication 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. As we have said since 2009, there has been no intentional wrong doing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary. We believe that the order is also not in line with the directions of the Hon'ble Bombay High Court order of 2011 and so we are confident of getting a stay before this order becomes effective." 

In September 2017, PW had moved a consent plea with Sebi to settle the investigations relating to its role in the Satyam scam. In 2009 too, the firm had filed a consent plea with Sebi which was rejected by the regulatory body. 

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The PW statement also said: "We have learnt the lessons of Satyam and invested heavily over the last nine years in building a robust and high quality audit practice, as also confirmed in 2015 by an independent monitor appointed by the US SEC." 

Sebi has been investigating the role of the auditing firm, Price Waterhouse Bangalore, which audited Satyam Computers between 2000 and 2008. The regulator was probing if two of PW's partners had played a role in concealing the scam that came to light in January 2009 when Satyam founder B Ramalinga Raju, through letters to the bourses, admitted to have fudged the books for several years. 

The regulator's objective was to prove fraud or connivance of the PW partners with the promoters of Satyam in fudging the company's books. Subsequently, PW had moved the Supreme Court challenging Sebi's jurisdiction and authority in starting an investigation against the audit firm. The apex court allowed Sebi to go ahead with its investigations. 

In 2017, Sebi got two extensions from the SC to complete its investigations in the case. 

Credits:
Times of India


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