The Securities and Exchange Board of India (SEBI) late on Wednesday barred PricewaterhouseCoopers (PwC) from auditing listed companies in the country for two years, after a probe into a nearly decade-old accounting fraud case in a software services company that became India's biggest corporate scandal.
Ramalinga Raju, founder and former chairman of the erstwhile software services exporter Satyam Computer Services, stunned Indian markets and investors in January 2009, when he admitted that the firm had overstated earnings and assets for several years, in a fraud of more than $1 billion sometimes referred to as “India's Enron”.
PwC was Satyam's auditor during the period in which the fraud was perpetrated.
In its order, the SEBI, on Wednesday said any entities or firms practicing as chartered accountants in India under the brand and banner of PwC, shall not directly or indirectly issue any certificate of audit of listed companies, or their intermediaries that are registered with the regulator for a period of two years.
“The network structure of operations adopted by the international accounting firm should not be used as a shield to avoid legal implications arising out of the certifications issued under the brand name of the network,” SEBI said in a 108-page order.
In India, all audit functions within the group are conducted under the PwC brand, with a network of local firms operating under the banner. The broader PwC entity handles consulting, tax advisory and other businesses.