New auditors on board, PwC backs out
The board of technology giant Satyam Computer Services Ltd on Wednesday appointed KPMG and Deloitte as the new auditors, marking the first tentative steps towards cleaning the company’s balance sheet.business Updated: Jan 15, 2009 00:58 IST
The board of technology giant Satyam Computer Services Ltd on Wednesday appointed KPMG and Deloitte as the new auditors, marking the first tentative steps towards cleaning the company’s balance sheet.
The announcement came on a day the earlier auditor, Pricewaterhouse, said its reports should not be relied upon as they were based on data given by the management that has confessed to doctoring its accounts.
The firm also faced some awkward questions from clients about financial and corporate governance that need immediate attention, failing which many of them may move to rival firms.
“The company is viable,” Kiran Karnik, a member of the new board, told Hindustan Times. “We’ve been communicating with clients who’ve raised some financial and governance questions. If these are addressed without delay, the company can retain most of the clients.”
The board, which first met on Monday, is expected to meet during the weekend to thrash out the finer contours of a turnaround strategy.
The company currently serves 690 clients, including multinational corporations such as GE, Nestle, Qantas and Arcelor Mittal. “The clients are happy about the services,” Karnik said.
The three-member government-appointed board has briefed the government about a clutch of liquidity-injection options. A top government official said banks were hesitant to lend money to Satyam. “The biggest problem is that the company is unable to borrow money on its own,” he said.
Price Waterhouse said Satyam’s founder chairman B. Ramalinga Raju’s confessional letter might have a material effect on the veracity of company’s financial statements presented to it. “Consequently, our opinions of the financial statements may be rendered inaccurate and unreliable,” said the auditor’s letter to the new Satyam board. It said its “audit reports should no longer be relied upon”.
“We went by the information and explanations provided by the management, and also verbal and written representations made,” the auditor said, adding that it audited Satyam’s accounts from June 2000 to September 2008.
KPMG and Deloitte will restate the company’s accounts and present the results for third quarter ending December 31, 2008. The shareholders will appoint the statutory auditors later.
Notices to respondents
The Bombay High Court on Wednesday asked Investors’ Grievances Forum to serve notices to the 18 respondents, including Satyam Chairman B. Ramalinga Raju and MD B. Rama Raju.