India’s securities regulator has banned global accountancy firm PricewaterhouseCoopers (PwC) from auditing listed companies in the country for two years, for failing to identify a $1.7 billion fraud at the defunct Satyam Computer Services.
According to the Financial Times, the Securities and Exchange Board of India accused the accounting firm of neglecting to check glaring anomalies in the financial reports of Satyam, once the fourth-largest software services firm in the country, between 2003 and 2008.
The defunct IT outsourcing firm owners were found guilty of inflating revenue by more than $1 billion through more than 7,000 fake invoices.
The accounting fraud case became India's biggest corporate scandal in 2009.
The market regulator says that PwC failed in its mandate to thoroughly and independently check the veracity of the monthly bank statements.
“It (PwC) relied upon assurances from Satyam without any further examination or inquiry into the matter and ignored the balance confirmations received directly from banks which were showing true balance,” the Financial Times quotes a regulator's report.
In 2011, PwC and its Indian unit were fined $7.5 million by the US securities regulator for failing to comply with accounting standards in the Satyam case. The Indian firm's shares were being traded at the New York Stock Exchange.
The move to slap the global auditing firm with a ban comes at a time when accountancy firms in East Africa have been increasing accused of colluding with companies to conceal their true financial picture.
Financial Times reported that PwC said it will seek a stay order.