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PwC to fight SEBI audit ban to limit franchise impact

Reuters  |  MUMBAI 

By and Devidutta Tripathy

(Reuters) - will contest a two-year auditing ban by and of (SEBI) over a nearly a decade ago at a company it audited, but even if it succeeds in preventing the move Indian business experts expect damage to the auditor's business.

The firm, which audited during the period in which the $1 billion took place, said it was disappointed by SEBI's 108-page order on Wedensday.

Satyam founder and former stunned Indian markets and investors in 2009 when he admitted that it had overstated earnings and assets for several years, in a sometimes referred to as "India's Enron".

There was no "intentional wrongdoing by PW firms in the perpetrated fraud", said in a statement after the order, adding that it had "learnt the lessons of Satyam" and invested heavily to build a high-quality audit practice.

Experts, however, said even if manages to get a court to issue a stay order on the ban, it faces the risk of losing clients. In India, court processes often take years and there could be multiple courts involved.

"Listed companies who are being audited may think of moving to other auditors due to the uncertainty, even if manages to get a stay order," said Shriram Subramaniam, who is founder of proxy advisory InGovern.

He said he expected the order to potentially impact 20-30 percent of PwC's Indian revenues and benefit its rivals.

Price Waterhouse's network is made up of 11 chartered firms with about 3,000 employees, and has around 75 listed companies as clients, a said.

These include and Piramal Enterprises, which did not immediately respond to requests for comment on the action.


In India, all audit functions within the group are conducted under the (PW) brand, with a network of local firms operating under the banner. The broader entity handles consulting, tax advisory and other businesses.

There could also be a knock-on effect on PwC's businesses in other parts of the world, said Pratibha Jain, a at firm

"They might lose a lot of business on the other sides, not just audit, and they have to report it in other jurisdictions. It's a global conglomerate and this may have global repercussions for them," she said.

In its order, said while PwC's "loose-knit network arrangement" enabled firms to derive the advantage of its global brand value but did not lay down any supervisory mechanisms to check the quality of the performance of the firms.

The and Exchange Commission (SEC) and the Public Company (PCAOB) had also pointed at failure of quality control in PW India, it said.

also ordered 'Price Waterhouse, Bangalore' and two of its former partners to jointly forfeit "wrongful gains" of about 131 million rupees ($2.1 million) plus interest within 45 days.

Satyam, which was bought by firm in an auction in 2010, and agreed in 2011 to pay a combined $17.5 million to settle U.S. probes into the

(Reporting by and Devidutta Tripathy; Additional reporting by Zeba Siddiqui, and Swati Bhat; Editing by Alexander Smith)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 20:23 IST