India's market regulator hits PwC with 2-year auditing ban


Satyam scam: Sebi bans Price Waterhouse entities from issuing audit certificates for two years

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. PwC is tthe auditor, testing the security of India's famed Aadhar network.

"Listed companies and intermediaries registered with Sebi shall not engage any 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", Sebi said in its 108-page order.

"We believe that the order is also not in line with the directions of the Bombay High Court order of 2010 and so we are confident of getting a stay", Price Waterhouse said in a statement.

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.

Sebi has also directed the auditing firm to pay Rs 13.09 crore along with 12 percent interest per annum since January 2009. It needs to be seen whether it would benefit the smaller firms or not, he added.

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

It also noted that the order relates to a fraud that took place almost a decade ago in which it played no part and had no knowledge of.

PW sources said that since the 2009 Satyam scam, where two partners of the firm were found to be involved in wrongdoing, the global audit and advisory giant has tightened its systems and has undergone several peer reviews.

In its order, Sebi held that PW did not comply with auditing standards and was complicit with the perpetrators in the Satyam scam. While Mr. Gopalakrishnan signed the accounts between April 2000 and March 2007, Mr. Talluri did it between April 2007 and September 2008.

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

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.

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.

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