The Securities and Exchange Board of India (SEBI), in a January 10 order, barred entities practicing as chartered accountants in India under the PwC brand from issuing audit certificates for listed Indian companies for two years.
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.
PwC has already announced that it is seeking a stay of the order before it becomes effective.
The decision responds to a fraud perpetuated by Satyam Computer Services and discovered in 2009 which is often compared to the US Enron scandal.
Satyam misled investors by massively overstating its earnings and assets. Satyam’s auditor from 2000–2008, a PricewaterhouseCoopers affiliated firm, signed off on the books.
In a scathing 108-page order, the Indian regulator said that the PwC network was responsible for the fraud because of a failure to conduct proper quality control.
Although the PwC firms were individual partner firms with separate legal existence, they benefited from the brand name and the resources behind it, and ostensibly held out to the public to be a single consolidated network of firms, SEBI said.
The PricewaterhouseCoopers affilated firm directly involved in the scandal and its partners were also held jointly and severably liable for Rs13,09,01,664 (USD 2 million), representing the audit fees plus interest.