One of the world’s top accounting firms has been banned from auditing listed companies in India for two years.
The country’s financial regulator has punished PwC for failing to spot fraud of over $1 billion at defunct tech firm Satyam Computer Services.
The Securities and Exchange Board of India (SEBI) said PwC auditors had failed to uncover irregularities in Satyam’s accounts over several years that were subsequently revealed in 2009 by Ramalinga Raju, the company’s chairman at the time.
Raju 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.
Satyam was one of India’s leading software providers, with 53,000 employees and nearly 700 clients across 65 countries. (The company was bought by Tech Mahindra in 2009.)
PwC overlooked “several red flags…. which were all too obvious.”
– Rishi Iyengar, CNN Money