Price Waterhouse gets 2-year ban in Satyam case

Price Waterhouse gets 2-year ban in Satyam case

Price Waterhouse gets 2-year ban in Satyam case

The regulator also ordered the disgorgement of over Rs 13-crore wrongful gains from the audit major and its two erstwhile partners - S. Gopalakrishnan and Srinivas Talluri - who had worked on the IT major's accounts.

Experts, however, said even if Price Waterhouse manages to get a court to issue a stay order on the SEBI ban, it faces the risk of losing clients.

The regulator said 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 PwC.

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.

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Price Waterhouse (PW) is set to challenge the two-year auditing ban imposed on it by the Securities and Exchange Board of India (SEBI) on January 10, Reuters reported.

SEBI had in February 2009 issued a show-cause notice to Price Waterhouse, among other entities, after it emerged that Satyam's accounts were falsified.

The order issued by SEBI stated: "Listed companies and intermediaries registered with Sebi shall not engage any audit 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".

PW was also complacent on not effectively implementing the accounting standards that laid considerable importance on effectiveness of internal audit and the need for an external audit to place trust on internal audit for collaborating, increased coverage and optimal usage of time.

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The order was passed under the Prevention of Fraudulent and Unfair Trade Practices (PFUTP) regulations and Section 11 of SEBI Act, which empowers the market regulator to pass directives in the interest of investors.

PwC has already announced that it is seeking a stay of the order before it becomes effective. It doesn't include 2017/18 audits for listed companies which are already in progress.

The order related to a fraud that took place almost a decade ago in which it played no part and had no knowledge of, it said.

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".

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The fraud surfaced in January 2009 when B. Ramalinga Raju, the then chairman of Satyam Computer Services Ltd., admitted in a letter to the company's board and stock exchanges to have inflated revenue and profit over several years.

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