India's market regulator hits PwC with 2-year auditing ban

India's market regulator hits PwC with 2-year auditing ban

Previously PwC, had made two attempts to settle the case through the consent mechanism.

Over nine years after the Rs 7136 crore Satyam Scam rocked India, Securities and Exchange Board of India (Sebi), late on Wednesday night (January 10) banned worldwide auditing giant Pricewaterhouse Coopers (PwC) and its network entities from issuing audit certificates to any listed company in India for a period of two years.

While making it clear that it will appeal against the Sebi order next week, Price Waterhouse (PW) also comforted around 3,000 auditors, saying that it will take care of their interest and there was no reason to worry.

However, it added it has learnt the lessons of Satyam and invested "heavily" over the last nine years in "building a robust and high quality audit practice".

"It is possibly the beginning of the end of the Price Waterhouse's auditing business in India as the clients will turn elsewhere. Though a two-year ban seems a bit harsh, it could deter the Big Four firms from expanding in India and affect their momentum", said Amarjeet Chopra, former president of the Institute of Chartered Accountants of India. The Satyam promoters inflated revenue and profits to showcase a healthy picture of the company when PwC was its auditor. The appointment of an auditor requires a shareholder resolution and board approval. "Satyam was egregious even by the standards of Indian accounting", said R. Narayanaswamy, professor of finance and control at the Indian Institute of Management Bangalore.

Sebi said PW firms benefited from the relationship with Satyam Computers by having collectively received a fee of Rs 23.31 core during 2000-08.

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. Companies may also not want to go through a removal process and appoint a new auditor, especially if the appointment is still fresh.

"The audit work for the current financial year will go on until September-October, but employees have nothing to worry about".

More news: Pruitt ready to solely focus on coaching Vols
More news: John Williams Will Score Star Wars: Episode IX
More news: Palestine is not for sale: PLO on Trump's threat to cut aid

Price Waterhouse has, expectedly, rejected the charges brought out against it by Sebi while expressing its disappointment on the ban. The Corporate Affairs Ministry (MCA) will examine SEBI's order, Union Minister PP Chaudhary said on January 11.

Many of these companies have large balance sheets, and comprise 4.4% of the 1,692 companies listed on the National Stock Exchange, India's largest exchange by transaction value.

"Why should they resign?"

The audit firm stands a better chance of getting a stay if it approaches the Securities Appellate Tribunal (SAT) instead of a court, said Sandeep Parekh, founder, Finsec Law Advisors and a former SEBI law officer. The event shocked the Indian markets and triggered investigations by several agencies.

The top global accountancy firms include PwC, Deloitte, EY and KPMG.

Sebi noted that the order would not impact audit assignments relating to the fiscal year 2017-18 undertaken by the firms forming part of the PwC network.

The affair, however, may make it hard for Price Waterhouse to win new clients because of the damage to its reputation, and the uncertainty that a court proceeding for a stay order would bring.

Related Articles

  • Schlumberger Limited (NYSE: SLB) - Explore Volume Patterns For Some Important Insights

    The oil and gas company reported $0.42 earnings per share (EPS) for the quarter, meeting the consensus estimate of $0.42. Alternatively an RSI nearing 30 indicates that the stock could be getting oversold and might be considered undervalued.
    United States  officials raid 7-Eleven stores amid crackdown on illegal

    United States officials raid 7-Eleven stores amid crackdown on illegal

    Eight of the accused wound up pleading guilty and were ordered to pay more than $2.6 million in back wages. He said there would be more employment audits and investigations, though there is no numerical goal.

    Tesla (NASDAQ:TSLA) Rating Reiterated by Barclays

    Robinson Capital Management Llc holds 0.31% of its portfolio in Flaherty & Crumrine Preferred Income Fund Inc. for 45,495 shares. Mckinley Capital Management LLC Delaware acquired a new position in shares of Tesla in the third quarter worth about $106,000.
  • Utah Jazz's Rodney Hood gets ejected, smacks fans phone out of hand

    Utah Jazz's Rodney Hood gets ejected, smacks fans phone out of hand

    But it's also kind of inappropriate, surely, to start filming an athlete when he's clearly going to be steaming angry. Bleacher Report noted that Hood can probably expect a call from the league office for his, hm, insouciance.

    Halliburton Company (NYSE: HAL) - Top RSI Trades for Today

    Charles Paquelet decreased its stake in Halliburton Co ( HAL ) by 27.5% based on its latest 2017Q3 regulatory filing with the SEC. Of course, these surface-level price movements don't tell us much about the direction that VNTV may be headed in the future.
    GKN plots break-up after rejecting £7bn takeover offer

    GKN plots break-up after rejecting £7bn takeover offer

    The town's ironworks supplied rails to railways in the United Kingdom and overseas , making it the world's largest by 1845. This is before accounting for the previously announced substantial write-offs in the North American Aerospace business.
  • AT&T drops plan to sell Huawei smartphone in US

    AT&T drops plan to sell Huawei smartphone in US

    Huawei, the Chinese telecom equipment giant and leading smartphone maker, has won a patent infringement lawsuit against Samsung . The China-based telecom operator Huawei failed to make a deal to sell its new smartphones through the United States operator.
    Leonardo DiCaprio to Join Family of Tarantino's Manson Movie

    Leonardo DiCaprio to Join Family of Tarantino's Manson Movie

    Cruise, Robbie, and DiCaprio aren't the only big names linked to Tarantino's new film, either. It was widely reported that Tarantino had initially wanted DiCaprio to play Col.
    Trump To Cut Off Pakistan From US Aid For Terror Support

    Trump To Cut Off Pakistan From US Aid For Terror Support

    Trump wrote further: "They give safe haven to the terrorists we hunt in Afghanistan, with little help". Senator Rand Paul said on Twitter he would lead the charge in the Senate to end aid to Pakistan.
  • Kratos Defense & Security Solutions (NASDAQ:KTOS) Earns News Sentiment Rating of 0.16

    Jr. sold $335,172 worth of Bristol-Myers Squibb Company (NYSE:BMY) on Tuesday, December 12. (NASDAQ:ULTA) for 1,558 shares. Goldman Sachs Group assumed coverage on Kratos Defense & Security Solutions in a research report on Thursday, December 7th.
    Will Reliance Jio launch JioCoin? Here's what you need to know

    Will Reliance Jio launch JioCoin? Here's what you need to know

    Last month, the Ministry of Finance warned investors to become aware of the risk surrounding cryptocurrency investments. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.

    Which Insiders Are Selling Weight Watchers International, Inc. (WTW)?

    Ubs Asset Mngmt Americas has invested 0% of its portfolio in Weight Watchers International, Inc . (NYSE: WTW ) for 425,134 shares. First Interstate Fincl Bank has invested 0.02% of its portfolio in PPL Corporation (NYSE:PPL). (NYSE:CAE) for 107,057 shares.