Published: Sun, January 14, 2018
World | By Paul Elliott

PwC barred from auditing India listed firms for two years

PwC barred from auditing India listed firms for two years

According to the Sebi order on Wednesday, Gopalakrishnan and Talluri have been restrained from directly or indirectly issuing any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with Sebi for a period of three years.#"The objective of insulating the securities market from such fraudulent accounting practices perpetrated by an global firm of repute will be ineffective if the directions do not bring within its sweep, the brand name PW".

In India, all audit functions within the group are conducted under the PwC brand, with a network of local firms operating under the banner. Currently, PW network firms carry out auditing activities for about 75 listed companies, an official in the know told the news agency. "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". "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.

In addition, the regulator ordered PwC to relinquish wrongful gains of about US$2 million and 12% annual interest for the past eight years. In the light of that stand, it is expected to challenge the Sebi order. It needs to be seen whether it would benefit the smaller firms or not, he added.

Soon after the SEBI order, Price Waterhouse Network issued a statement saying, "We are disappointed with the findings of the Sebi investigations and the adjudication order".

The decision responds to a fraud perpetuated by Satyam Computer Services and discovered in 2009 which is often compared to the US Enron scandal.

"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". Satyam's auditor from 2000-2008, a PricewaterhouseCoopers affiliated firm, signed off on the books.

The Satyam scam was unearthed in 2009, after the then Chairman of Satyam B Ramalinga Raju admitted in a letter to overstating the company's assets by Rs5,040cr.

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. A senior chartered accountant said the impact of the SEBI ruling on the auditing business of PW network firms and others can not be assessed immediately.

Like this: