PWC affiliates fined for hedging Satyam audits
Affiliates of PricewaterhouseCoopers (PwC) botched audits of Satyam Computer Services, failing to notice that the company had more than $1 billion (R4,500 crore) of fictitious cash balances, regulators charged on Tuesday. David S. Hilzenrath reports.india Updated: Apr 06, 2011 22:53 IST
Affiliates of PricewaterhouseCoopers (PwC) botched audits of Satyam Computer Services, failing to notice that the company had more than $1 billion (R4,500 crore) of fictitious cash balances, regulators charged on Tuesday.
Instead of checking with the company’s banks to confirm account balances, the auditors let Satyam’s management perform checks for them, regulators alleged.
“PW India failed to conduct even the most fundamental audit procedures,” said Cheryl Scarboro, an SEC enforcement official.
The Indian affiliates of PricewaterhouseCoopers agreed to pay $7.5 million in penalties to the SEC and the oversight board set up in the US to auditors. Satyam settled SEC fraud charges on Tuesday by agreeing to pay a $10-million fine. It neither admitted nor denied wrongdoing.
As part of the alleged fraud, Satyam created more than 6,000 bogus invoices, including bills for nonexistent customers, the SEC said.
PW India, which neither admitted nor denied wrongdoing, said that neither of the regulatory actions “found that PW India or any of its professionals engaged in any intentional wrongdoing or was otherwise involved in the fraud perpetrated by Satyam management.”
When the fraud was revealed, the price of Satyam shares fell and institutional investors in the US lost more than $450 million, the SEC said.