Indian PWC Wins Another World Cup for the Country, But in Corruption Charges
By Bilal Siddiqui
The S.E.C fined PWC India, $7.5 million in what was described as the largest American penalty ever against a foreign accounting firm.
The name PWC has been in news, unfortunately for all the wrong reasons. Be it in India, Afghanistan or Pakistan, PriceWaterCoopers are under accusations everywhere.
The Indian affiliate of PricewaterhouseCoopers routinely failed to follow the most ‘basic’ audit procedures, the United States Securities and Exchange Commission said Tuesday as it penalized the firm for its failed audits of Satyam Computer Services, the Indian company that falsely reported more than $1 billion in profits, learned NewYork Times.
The S.E.C. and the Public Company Accounting Oversight Board fined the affiliate, PW India, $7.5 million in what was described as the largest American penalty ever against a foreign accounting firm.
The S.E.C. said the auditors had failed to independently confirm cash balances in bank accounts that supposedly rose to over $1 billion by the time the fraud ended. Had the balances been real, they would have accounted for more than half the company’s assets. The company later said that its actual cash balances at the end of September 2008 were $66 million, not the more than $1 billion it claimed.
The auditors, legally part of five separate firms that, together with five others, do business as PW India, did not seek confirmation of cash balances from the banks involved, but instead relied on management to provide them, the S.E.C. said, adding that that was a violation of auditing standards.
“PW India violated its most fundamental duty as a public watchdog by failing to comply with some of the most elementary auditing standards and procedures in conducting the Satyam audits,” said Robert Khuzami, the commission’s director of enforcement.
Although audit firms around the world use similar names and are part of global networks, the firms say they are legally independent. The international networks say they have procedures to assure that their affiliates perform high-quality audits, but those procedures appear to have broken down in this case.
You might like to read about our previous article where Pakistani PWC, famously known as A.F.Ferguson and Co, was under accusation from Afghan finance ministry.