By our reporter
PwC, a global accountancy firm has been banned by India’s securities regulator from auditing listed companies for two in the country.
The development came after the firm failed to spot a $1.7 billion fraud at the defunct Satyam Computer Services.
In a damning 108-page report, the Securities and Exchange Board of India (Sebi) wrote that PwC had neglected to check “glaring anomalies” in the financial details reported by Satyam, whose downfall was one of India’s worst financial scandals in recent years.
According to Financial Times, an online news site, for about five years beginning in 2003, Sebi wrote, Satyam inflated its revenue by accounting for 7,561 fake invoices. The fraud persisted in part because PwC, Satyam’s auditor, “did not independently check the veracity of the monthly bank statements”. It relied upon assurances from Satyam “without any further examination or inquiry into the matter and ignored the balance confirmations received directly from banks which were showing true balance”, the regulator wrote.
As well as the auditing suspension, Sebi ordered PwC to disgorge wrongful gains of about $2m.
PwC said it was “disappointed”, adding that it would seek a stay on the order before it became effective at the end of March, on the grounds that it was out of line with a prior High Court order.
It should be remembered that Bank of Uganda used information from the same auditing firm to gather evidence against property mogul Sudhir Ruparelia in a case he is accused of siphoning billions of cash from the now defunct Crane Bank.