Clean chit for PWC from CBI

Others 1307 views 6 replies

Hareesh H Sharma

Cleared IPCC..now article

894 Points Joined September 2009

The Central Bureau of Investigation (CBI), which is probing the multi-crore Satyam accounting fraud, has given a clean chit to PricewaterhouseCoopers (PwC), the firm’s erstwhile statutory auditors.

The CBI, in its supplementary chargesheet filed on November 24 at the XIV Additional Chief Metropolitan Magistrate Court, revealed that the auditors S Gopalkrishnan and Srinivas Talluri, were employees of Lovelock & Lewes (L&L) and that the remuneration, which Satyam paid to the auditors, reached the accounts of L&L instead of PwC, which was appointed as the statutory auditor in 2001.

“The actual statutory audit of Satyam was in fact conducted by a firm called L&L and not by PwC, who was appointed by the investors during the AGM,” said the CBI in its supplementary report, a copy of which is available with Express. It added that the audit team members who assisted Gopalakrishnan and Srinivas were employees of L&L and not that of PwC and thereby steering clear of PwC’s role in the entire scam.

It must be noted that PwC acquired L&L almost a decade ago. However, technically, L&L operated as a PwC network firm in India and hence L&L partners weren’t allowed to sign anything on behalf of PwC.

Earlier in June 2009, Ramesh Rajan, Chairman and CEO, PwC India, too informed CBI regarding the acquisition made by PwC and that partners of L&L weren’t authorised to sign on behalf of PwC.

In January 2009, both Gopalakrishnan and Srinivas were arrested on charges of alleged involvement in fudging the books of accounts of Satyam. Subsequently, the Institute of Chartered Accountants of India, regulatory body of accountants, removed membership of Gopalakrishnan from all the eleven non-standing committees. Auditing firms Deloitte and KPMG are currently restating the books or accounts and likely to complete the process by July 2010.

Replies (6)

sandy yadav

30 Points Joined October 2009

nice............

Max Payne

employed

2574 Points Joined May 2008

So technically, no one has signed the balance sheet in 2001... hilarious because no one noticed.

1. PwC did not remember that auditors were supposed to sign balance sheets after the audit?

2. Since when can employees sign balance sheets for a firm (which weren't the auditors)?

3. Is CBI even reading PCC book of auditing before it embarks on the adventure of spending tax payers' money?

Ansari

ca final

444 Points Joined November 2009

Originally posted by :G.K..
"	So technically, no one has signed the balance sheet in 2001... hilarious because no one noticed. 1. PwC did not remember that auditors were supposed to sign balance sheets after the audit? 2. Since when can employees sign balance sheets for a firm (which weren't the auditors)? 3. Is CBI even reading PCC book of auditing before it embarks on the adventure of spending tax payers' money?	"

I think GK is technically right.

Rahul Bansal

Finalist

35929 Points Joined September 2009

big news

Aravind

CA-Final

71 Points Joined October 2007

lovelock and lewes is a partnership firm, whereas PWC is a private limited company in India.

I think the stand of CBI is correct. even shareholders have appointed l and l as statutory auditors and not PWC ( which is 100% correct, since in India, only partnership firms can sign the accounts of a company)

FOR GK

So technically, no one has signed the balance sheet in 2001... hilarious because no one noticed. --->>> lovelock and lewes signed the accounts of satyam in 2001.
1. PwC did not remember that auditors were supposed to sign balance sheets after the audit? ---->>> refer above comment
2. Since when can employees sign balance sheets for a firm (which weren't the auditors)? ---->>>> employees did not sign the accounts of the company. lovelock and lewes is an independent partnership firm.
3. Is CBI even reading PCC book of auditing before it embarks on the adventure of spending tax payers' money ---->>> cbi's report is very much correct

Max Payne

employed

2574 Points Joined May 2008

Hey Aravind, the news item here gave me the impression that PwC LLP were the appointed auditors.

See the quotes - “The actual statutory audit of Satyam was in fact conducted by a firm called L&L and not by PwC, who was appointed by the investors during the AGM,”

"Earlier in June 2009, Ramesh Rajan, Chairman and CEO, PwC India, too informed CBI regarding the acquisition made by PwC and that partners of L&L weren’t authorised to sign on behalf of PwC."

- my impression on reading was that PwC had a valid appointment and were the actual auditors.

Thanks for clearing that it was L&L who were statutory auditors.

Then the CBI are correct, like u pointed out.

But my point is still correct that employees of a firm cannot sign the balance sheet on its behalf. Were not they aware of that being CAs themselves?

I think they are finding scapegoats by bringing out skeletons from the closet...... Mr.Gopalakrishnan is anyway going down in the GTB scam.... They are piling it on him i feel. The scam had only started then in 2001.. Was it not 10 crores or something with which the fudging started? What about the 2 billion dollar scam that came out in 2008? Surely a title to the news like "CBI gives PwC clean chit" is very misleading and they are making max mileage out of it...