Indian Accounting Regulator Slams PwC Over Satyam Computers Scandal

Lucas Gilmore, “Big 4″ observer
February 08, 2011 /

The Institute of Chartered Accountants of India (ICAI) will soon take disciplinary actions against auditors from PricewaterhouseCoopers who were involved in Satyam computers scandal in January 2009.

Few weeks from now, the ICAI will serve the notice to PwC auditors as confirmed by officials after the Indian accounting regulator has finalized accounting-related charges against the firm.

“The court has allowed us to go to a particular stage only and to read out charges to them. I think the main charge is that the auditors have been grossly negligent on many ways. I cannot defend an audit where out of Rs 8000 crore (US$177), Rs 6000 crore (US$133) is missing,” said Amarjit Chopra, President of ICAI.

Chopra has confirmed that the investigation was already ended. ICAI has named S Gopalakrishnan and Srinivas Talluri as liable to the Satyam computers scandal.

Gopalakrishnan and Talluri are the latest names that emerged to have participation in the accounting error. Both are likely to lose membership in ICAI subject to court approval, the accounting regulator said.

When the Satyam computers scandal broke out in 2009, other PwC auditors were immediately arrested.

At issue was the allegation from the Central Bureau of Investigation that PwC auditors had received bribes from Satyam to manipulate its reports about the company’s accounts.

ICAI is currently on its way to dig deeper into the scandal to see if there had been similar malpractices that took place before 2009.

But Chopra said ICAI has no authority under Indian laws to sue firms, only individuals. However, he added that ICAI has already asked for permission from the government to carry out disciplinary actions against accounting firms that would commit malpractices in its services, as well as any companies that have participation in the auditing.

The charges are the latest development in the issues implicating PwC in several accounting scandals.

Late last month, the National Potato Cooperative (NAK) in South Africa has succeeded in obtaining court order requiring PwC auditors to pay $14 million in damages after NAK claimed that PwC failed to thoroughly look into its finances and write-offs in the debtors books for 14 reporting periods beginning 1984 until 1998.

 

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