Ban on PwC stays for now

Lloyd Doyle
January 20, 2018

On January 10, the markets watchdog Sebi had banned the auditor for its alleged complicity in the multi-crore scam. The markets regulator, Securities and Exchange Board of India, last week barred Price Waterhouse from auditing listed companies in the country for two years, after a probe into a almost decade-old accounting fraud case in a software services company that became India's biggest corporate scandal.

According to Sebi, the objective of insulating the securities market from such fraudulent accounting practices perpetrated by an global firm of repute will be ineffective if the directions do not bring within its sweep the PW brand name.

At the hearing today, SAT refused to stay the ban, saying it will hear the matter next on February 13. The SAT clarified that "audit assignments already undertaken by Price Waterhouse pertaining to financial year ending 2017 will not be affected".

However, the order will not impact audits conducted by the firms concerned for 2017-18.

However, in a relief to PwC, the SAT clarified audit assignments already undertaken by the firm for clients who follow the financial year beginning January 1, 2018 will not be impacted by the order of the Securities and Exchange Board of India (Sebi).

"Similarly PW shall be at liberty to complete any other work of certification (besides audit) already in their hands", SAT said.

The SAT order observed that Rustomjee "fairly stated that the order itself makes it clear that assignment pertaining to financial year 2017-18 will not be affected". The Tribunal however made it clear that the firm "shall not take any new assignment with any clients and also with existing clients with obligation beyond December 31, 2018". 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 per cent per annum from January 7, 2009 till the date of payment".

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