PwC has been banned from auditing listed companies in India for two years, according to The Securities and Exchange Board of India (SEBI) as the Big Four’s auditors failed to spot fraud of more than US$1 billion at IT services firm Satyam.
According to SEBI, Satyam inflated its revenues with 7,561 fake invoices. It was once a top player in the country’s IT sector but ceased operation after an accounting scandal in 2009. In 2012, Satyam was sold to rival Tech Mahindra which dropped the brand.
Ramalinga Raju, Satyam’s chairperson in 2009, admitted that he made up about US$1 billion of the firm’s cash on it books. According to a report by CNN Money, Raju received a seven-year jail sentence along with nine co-conspirators in 2015.
SEBI, in a 108-page report, accused PwC of ignoring the balance confirmations received by banks, which showed the real balances.
PwC overlooked "several red flags...which were all too obvious for any reasonable professional auditor to miss," the Indian regulator said in its ruling published on Wednesday.
In addition, the regulator ordered PwC to relinquish wrongful gains of about US$2 million and 12% annual interest for the past eight years.
PwC said it was disappointed by the order in a statement on Thursday, adding that there was no evidence to indicate any intentional wrongdoing on its part.
According to a CNNMoney report that cites an anonymous source, the accounting firm is considering appealing the decision .
PwC was also banned in Ukraine in 2017 after misrepresenting financial statements of PrivatBank, a retail and commercial bank in the country, according to media reports.