PwC banned from auditing listed firms in India

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In its order, the SEBI, on Wednesday said any entities or firms practicing as chartered accountants in India under the brand and banner of PwC, shall not directly or indirectly issue any certificate of audit of listed companies, or their intermediaries that are registered with the regulator for a period of 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".

The notification also said it will not impact audits for the financial year 2017-18.

Besides, the watchdog has ordered disgorgement of over Rs 13 crore wrongful gains by the audit major and its two erstwhile partners who worked on the IT majors accounts.

The ban comes after the firm was accused of negligence in its audit work at the now defunct Satyam Computer Services.

The audit firm stands a better chance of getting a stay if it approaches the Securities Appellate Tribunal (SAT) instead of a court, said Sandeep Parekh, founder, Finsec Law Advisors and a former SEBI law officer.

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According to Sebi, it needs to be borne in mind that PW firms have benefited from the relationship from Satyam Computer Services by having collectively received a fee of over Rs23 crore during 2000-2008 period. The company was bought by Tech Mahindra, another outsourcing company.

"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", said SEBI, reported the Economic Times.

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 PW statement continued, "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".

The Satyam scam arose when Ramalinga Raju, founder of the erstwhile Satyam Computer Services Ltd, admitted that he had padded the books of the software services giant for several years by nearly Rs 7,000 crore. The public had no reason to believe that the audit reports were false and misleading.

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.