Price Waterhouse To Challenge Audit Ban in India

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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 Securities and Exchange Board of India said that PwC was complicit with the main perpetrators of the accounting fraud at Satyam Computer Services nine years ago, and it was found that audit firm did not comply with the auditing standards and norms.

PwC, and several entities associated with the audit firm, have been banned from auditing any listed entity for two years.

The firm said it was "confident of getting a stay" as the SEBI order was "not in line with the directions of the Bombay High Court order of 2011".

Although the PwC firms were individual partner firms with separate legal existence, they benefited from the brand name and the resources behind it, and ostensibly held out to the public to be a single consolidated network of firms, SEBI said.

Sebi said the objective of insulating the securities market from such fraudulent accounting practices perpetrated by an worldwide 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 Price Waterhouse (PW) brand, with a network of local firms operating under the banner.

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.

The ban stipulates that PW and the firms in its network (PWC India) can not audit listed companies and intermediaries for two years.

After consent pleas were rejected, PW had approached the Supreme Court challenging Sebi's jurisdiction over auditors.

"As we have said since 2009, there has been no intentional wrongdoing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary", Price Waterhouse said in a statement.

Out of this amount, over Rs13 crore was paid towards PW Bangalore for the audit of Satyam Computer Services as submitted by it, the regulator added. The company was bought by Tech Mahindra, another outsourcing company.

Gopalakrishnan and Srinivas had certified Satyam's audit reports from 2000-08.

On January 7, 2009, Satyam's chairman Ramalinga Raju admitted his guilt and wrote a letter of confession to the employees. "In this context, the long period during which the falsification of account books took place, without the same drawing the attention of PWCIL or other PW entities in India, points to a systemic problem in the audit processes carried out by the PW entities", Sebi said.

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