Price Waterhouse To Challenge Audit Ban in India

Price Waterhouse To Challenge Audit Ban in India

Though the order comes into effect immediately, it will not be applied to any audit assignments relating to the 2017-18 financial year undertaken by firms in the PriceWaterhouseCoopers network, to ease "operational difficulties", SEBI said.

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.

Shares of Satyam were also listed in the US.

"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", Price Waterhouse said in a statement.

"The network structure of operations adopted by the worldwide 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", SEBI further said in its 108-page order. "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", the SEBI order said.

In addition, the regulator ordered PwC to relinquish wrongful gains of about US$2 million and 12% annual interest for the past eight years.

Late Wednesday evening, Sebi had banned the PW Network from engaging in audit work with any listed company for two years, starting April 2018.

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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. While Mr. Gopalakrishnan signed the accounts between April 2000 and March 2007, Mr. Talluri did it between April 2007 and September 2008.

He said he expected the SEBI order to potentially impact 20-30 percent of PwC's Indian revenues and benefit its rivals.

The Wall Street Journal reported that PwC was in charge of auditing Satyam's accounts at the time its founder, B. Ramalinga Raju, admitted that he had boosted revenue by forging bank documents and inflating sales figures.

"They might lose a lot of business on the other sides, not just audit, and they have to report it in other jurisdictions".

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 USA probes into the fraud.

There was no "intentional wrongdoing by PW firms in the unprecedented management perpetrated fraud", Price Waterhouse said in a statement.

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