India’s securities regulator has banned the global accountancy firm PriceWater House Coopers (PwC) from auditing listed companies in the country for two years, after it failed to spot a $1.7bn fraud at the defunct Satyam Computer Services.
SEBI on Wednesday found PwC guilty in the Satyam scam and barred its network entities from issuing audit certificates to any listed company in India for two years.
In a damning 108-page report, the Securities and Exchange Board of India 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. 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”.
Price Waterhouse Bangalore and its two erstwhile partners — S. Gopalakrishnan and Srinivas Talluri — have been directed to jointly and severally disgorge the wrongful gains of “Rs 13,09,01,664 ($2m)with interest calculated at the rate of 12 per cent per annum from January 7, 2009 till the date of payment”. They have to pay the amount within 45 days.
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