India's market regulator has banned international accounting firm PwC from auditing listed companies for two years because of its role in one of the country's biggest corporate scandals.
The Securities and Exchange Board of India (SEBI) issued the order after finding the firm guilty of certifying the falsified accounts of software firm Satyam Computers from 2000 to 2008. The fraud came to light nine years ago, when Satyam Computers’ founder confessed to manipulating the company's accounts and inflating profits by $1.15 billion.
PwC has denied any intentional wrongdoing and stated that the banning order “relates to a fraud that took place nearly a decade ago in which we played no part and had no knowledge of."
The collapse of Satyam Computers in 2009, which was one of India’s biggest software companies, cost shareholders more than two billion US dollars.
PwC’s problems in India come just days after a US federal judge ruled that the firm’s failure to identify fraud involving made-up mortgages at Colonial Bank amounted to professional negligence. A trial will now decide how much PwC owes the Federal Deposit Insurance Corporation, the organisation that spent $2.8 billion when it stepped in to protect Colonial depositors after the bank’s 2009 collapse.
Such incidents indicate the huge responsibilities on those who audit company accounts. Any perceived failure – real or imagined – by them can lead to major financial and professional problems.
For this reason, they should leave nothing to chance and seek immediate legal advice if they suspect anything untoward.
Suggested Reading: On The Money.