PWC is banned for two years in India from auditing listed firms

In what could be seen as a major development, the Securities and Exchange Board of India (Sebi) has barred PwC’s network entities from issuing audit certificates to any listed company in India for two years. This followed after PwC was found guilty in the Satyam scam.

Sebi also ordered the disgorgement of over Rs13 crore of wrongful gains from the auditing firm and its two erstwhile partners who worked on the IT company’s accounts. The order comes nine years after the scam at Satyam Computer Services came to light and after two failed attempts by PwC to settle the case through the consent mechanism.

This is also one of the most stringent orders passed by any regulator against a Big Four auditor.

“We are disappointed with the findings of the Sebi investigations and the adjudication order... we are confident of getting a stay before this order becomes effective,” PwC said in a statement.

In a 108-page order, Sebi has imposed a two-year ban on entities/ firms practicing as chartered accountants in India under the brand and banner of PwC from directly or indirectly issuing any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with the regulator.

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. Besides, Price Waterhouse Bangalore and its two erstwhile partners-S. Gopalakrishnan and Srinivas Talluri-have been directed to jointly and severally disgorge the wrongful gains of “Rs13,09,01,664 with interest calculated at the rate of 12 per cent per annum from January 7, 2009 till the date of payment”. They have to pay the amount within 45 days.

Further, Gopalakrishnan and Talluri have been restrained from directly or indirectly issuing any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with Sebi for three years.

After consent pleas were rejected, PwC had approached the Supreme Court challenging Sebi’s jurisdiction over auditors. The apex court had asked the regulator to expeditiously pass the order in the matter after giving due opportunity, including access to documents, to the parties concerned.

As one of the top professional services firm, PWC offers everything from legal services and insolvency procedures to capital markets advisory work and advice on cyber security. The firm is attempting to tap potentially lucrative growth areas and present themselves as a “one-stop shop” with the presence in 157 countries with more than 223,000 people across the globe and in India, their offices spread across various cities includes Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune.

With this order, a big question mark could also come on the group company that is into consulting division, engaged into various key and critical projects as consultants in India, which is kept as the separate division of PWC.

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