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Home»BUSINESS»Relief to PW on Satyam
BUSINESS

Relief to PW on Satyam

EditorialBy EditorialSeptember 9, 2019Updated:September 12, 2019No Comments3 Mins Read
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The Securities Appeal Tribunal (SAT) today granted a major relief to the global audit firm Price Waterhouse (PW) in a decade-old Satyam scam, revoking the Securities and Exchange Board of India (Sebi) order against it. In January 2018, SEBI issued an order banning its firms and two auditors in view of PW’s role in the multi-crore scam in the Ramalinga Raju-promoted company. Under this, they could not provide audit services to listed companies and market intermediaries for two years. The scam was revealed in January 2009. It showed a cash balance of over Rs 3,300 crore by manipulating the company’s bank documents.

 
The PW appealed against the SEBI order in January last year in SAT. SAT members Tarun Aggarwal and CKG Nair said in the 125-page order that the SEBI order did not live up to the facts and is quashed. Instructions given to enlisted companies not to take services of PW Network’s audit firm are also revoked. However, SAT said that the fee of Rs 13 crore paid to the PW for not doing the work properly can be withdrawn along with interest.
 
SAT said in his order, “There is no doubt that the auditors made a professional mistake in conducting the audit.” His biggest failure was that he did not directly confirm the company’s bank balance and fixed deposits with the bank. These mistakes will be considered negligence. The Institute of Chartered Accountants of India has already taken action against the auditors in this matter. The Sebi action triggered a debate as to whether the market regulator was interfering with the rights and powers enjoyed by ICAI under the Chartered Accountants Act.
 
SEBI had ordered against the PW and its auditors, using special powers given to it to protect the interests of the securities market investors. Sait said the SEBI order was remedial action and not punitive action. It was not appropriate to ban the entire audit firm. Sait said that the long delay in passing the final order in the Satyam case does not do justice to the audit firm. The show cause notice was issued on February 14, 2009 and August 26, 2009 while the final order was issued on January 10, 2018. Sebi took nine years to complete this work and it is entirely the fault of the market regulator. The tribunal reprimanded SEBI for restricting the entire network of PWs. Sait said that most of the partners of PW firms were involved only after 2009. It said that while pending the proceedings of the Satyam case, PW firms continued their business and satisfactorily audited several listed companies. SEBI can appeal against this order of the SAT to the Supreme Court. According to sources, the market regulator is concerned that after the SAT order, its authority to take action against the auditors may be challenged in future.

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