The Securities and Exchange Board of India (SEBI) has banned PwC (FY16 gross revenue of $14.3 billion) from auditing listed companies in the country for two years, after it failed to spot a $1.7 billion fraud at the now defunct Satyam Computer Services, according to CNN.
SEBI claims PwC auditors failed to uncover irregularities in the account of Satyam, which was one of India’s leading software providers.
These irregularities were revealed in 2009 by Ramalinga Raju, the company’s chairman. He admitted to inflating Satyam’s profits with “fictitious” assets, non-existent cash and misreporting of debts the company was owed. He was sentenced to seven years in jail along with nine co-conspirators in 2015.
SEBI believes that PwC overlooked “several red flags…. which were all too obvious for any reasonable professional auditor to miss.”
SEBI also ordered the accounting firm to relinquish “wrongful gains” of around 130 million rupees ($2 million), plus 12% interest per year for the past eight years.
“The SEBI order relates to a fraud that took place nearly a decade ago in which we played no part and had no knowledge of,” says PwC.