Charges framed against Indian accounting firm

The firm was alleged to have failed to conduct basic auditing procedures that would have detected fraud at AremisSoft.

Two accounting firms, one Indian and another from Cyprus, have been charged with alleged misconduct by the Securities & Exchange Commission in their audits of collapsed UK software group AremisSoft Corp.

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The charges have been filed against Savvides & Partners/PKF in Cyprus and RK Dhawan & Co from India at a Manhattan court alleging that the two companies have failed to conduct basic auditing procedures that would have detected fraud at AremisSoft.

The US watchdog is seeking civil penalties from the firms.

The charges relate to the collapse of AremisSoft in 2002 which, according to the SEC, engaged in a number of fraudulent practices to make it appear as if the company had a sales growth.

In 2005, the former co-chief executive of AremisSoft, Roys Poyiadjis, agreed to pay $200 million to settle charges that he unloaded millions of shares in the software company while misleading investors about its revenue. The payment was the largest amount ever recovered by the SEC.