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Price Waterhouse Ban: Many Listed Firms to Soon Scout for Auditors

Scores of listed companies will soon have to scout for new auditors with markets regulator SEBI banning firms in the Price Waterhouse network from issuing audit certificates for two years in the multi-crore Satyam case.

A major player in the auditing space, Price Waterhouse has a total of 11 network firms and employs around 3,000 people in India.

Also Read: The Undoing of Price Waterhouse in the Satyam Scam Case

In a significant order on Wednesday, 10 January, SEBI barred Price Waterhouse network firms from issuing audit certificates to any listed company in India for two years after finding the audit major guilty in the multi-crore Satyam Computer Services scam that came to light in January 2009.

Besides, the watchdog has directed the audit major and its two erstwhile partners who worked on the IT firm's accounts to disgorge wrongful gains worth over Rs 13 crore. Currently, PW network firms carry out auditing activities for about 75 listed companies, an official in the know said.

Smaller Audit Firms To Benefit?

These companies would soon be required to look for new auditors in the wake of the SEBI order even though the regulator has made it clear that the ruling would not impact audit assignments relating to the financial year 2017-18 undertaken by the PW network firms.

While there would be no direct impact, SEBI’s ruling could also raise questions about PW network entities’ auditing of unlisted and other entities. 

A senior chartered accountant said impact of the SEBI ruling on auditing business of PW network firms and others cannot be assessed immediately. It needs to be seen whether it would benefit the smaller firms or not, he added.

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

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 "Rs 13,09,01,664 with interest calculated at the rate of 12 percent per annum from 7 January, 2009 till the date of payment".

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.

Price Waterhouse on Thursday said there has been no intentional wrongdoing by its firms in the Satyam case and expressed confidence of getting a stay on the SEBI order. 

Last year at the foundation day of chartered accountants' apex body ICAI, Prime Minister Narendra Modi had called for creating four big Indian accounting firms that are counted among the world's Big-8 even as he cautioned CAs against misuse of their all-powerful signature.

Referring to the 'Big 4' -- a term used for the world's four biggest audit firms -- the prime minister had said there are so many accounting firms in India but none of them has managed to find a place among the top global players.

"People talk of the Big 4 accounting firms. Sadly, there is no Indian firm there. By 2022, let us have a Big 8, where 4 firms are Indian." - PM Modi had said

The top global accountancy firms include PwC, Deloitte, EY and KPMG.

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