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PwC banned from auditing listed firms in India
14 January 2018, 01:01 | Opal Carroll
PwC banned from auditing listed companies in India
The order states that PW and audit firms in its network can not issue audit certificates directly or indirectly, but it will not impact the audits taken up for the 2017-18 financial year.
"The network structure of operation adopted by the global accounting firm should not be used as a shield to avoid legal implications arising out of the certifications issued under the brand name of the network", it added. Currently, PW network firms carry out auditing activities for about 75 listed companies, an official in the know told the news agency.
"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", PwC said in a statement.
The SEBI order comes nearly seven years after the U.S. Securities and Exchange Commission (SEC) agreed to a $6 million settlement over charges against Indian affiliates of Price Waterhouse related to deficient auditing of Satyam.
The board also ordered PwC and two former partners who worked on Satyam's accounts - S Gopalakrishnan and Srinivas Talluri - to repay over Rs 130 million ($2 million) of wrongful gains. The firm added that it had "learnt the lessons of Satyam" and brought in high-quality audit practice.
Price Waterhouse has, expectedly, rejected the charges brought out against it by Sebi while expressing its disappointment on the ban.
"As laid down by the Hon'ble Supreme Court, it is incumbent on Sebi to take stern view of market abuse and fraudulent practices, particularly when persons tasked with protecting the interest of investors are themselves hand-in-glove with the main perpetrators of the fraud", Sebi said.
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 US probes into the fraud.
On January 7, 2009, Satyam's chairman Ramalinga Raju admitted his guilt and wrote a letter of confession to the employees. "Their interests are fully protected and we are hopeful of a positive verdict when we appeal against the Sebi order", said a senior PW executive.
PW was the auditor of the company between 2000 and 2008.
The Indian authorities said that, from 2003 onwards, Satyam's sales revenues were inflated by accounting for 7,561 fake invoices, and Price Waterhouse failed to check the veracity of the monthly bank statements.
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.
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