Over 3000 jobs at stake after two-year SEBI ban on PwC in Satyam case

The Securities and Exchange Board of India's (SEBI) decision to ban Price Waterhouse and its network audit firms from auditing listed companies for the two years can put at risk jobs of over 3,000 employees involved in the firms audit practice alone.

As many as 11 network firms of PW audits around 75 listed companies including Colgate-Palmolive, Tata Global Beverages, Reliance Power and United Breweries.

However, sources from PW says that it is too early to say that there could be job losses as the audit firm is going to appeal against the order and it expects getting a stay against the decision.

The stock market regulator, SEBI, has found a network firm of PW -- PW Bangalore --  involved in gross negligence and fraudulent misrepresentation in the Satyam Computers case in which the Hyderabad-based company inflated its revenue through fake invoices.

The network of audit firms consist of independent firms which have separate registrations with the Institute of Chartered Accountants of India. A firm which is a  member of the Price Waterhouse network cannot act as an agent of any other member firm nor can it obligate any other member firm, and is liable only for its own acts or omissions and not those of other member.

SEBI in its order said that listed companies and intermediaries registered with SEBI should not engage any audit firm forming part of the PW Network, for issuing any certificate with respect to compliance of statutory obligations which SEBI is competent to administer and enforce, under various laws for a period of two years.

It also ordered disgorgement of Rs 13.09 crore fee  that it earned from auditing Satyam Computers' books with interest at the rate of 12% per annum from 7 January 2009 till the date of payment.

Meanwhile, PW said in a statement issued today:  "We are disappointed with the findings of the SEBI investigations and the adjudication order. The SEBI order relates to a fraud that took place nearly a decade ago in which we played no part and had no knowledge of.  As we have said since 2009, there has been no intentional wrong doing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary. We believe that the order is also not in line with the directions of the Bombay High Court order of 2010and so we are confident of getting a stay."

It further says that the audit firm has learnt lessons from Satyam scam and invested heavily over the past nine years in building a 'robust and high quality audit practice'.