The regulator barred entities and firms rendering the services of chartered accountants in India under the banner of Price Waterhouse from issuing audit certificates.
The Securities and Exchange Board of India said Price Waterhouse chose to rely on "glaring anomalies" and huge differences in the company's balance confirmations during its audit work between 2001 and 2008. Currently, PW network firms carry out auditing activities for about 75 listed companies, an official in the know told the news agency. "We believe that the order is also not in line with the directions of the Hon'ble Bombay High Court order of 2010 and so we are confident of getting a stay before this order becomes effective", the spokesperson added, referring to the August 2010 High Court order that ruled that no direction can be issued against PW if there is only some omission without proof of connivance and intent to fraud.
Though the order comes into effect immediately, it will not be applied to any audit assignments relating to the 2017-18 financial year undertaken by firms in the PriceWaterhouseCoopers network, to ease "operational difficulties", SEBI said.
SEBI has also asked PW to pay a fine of Rs 13.09 crore, combined with interest at 12 percent per annum from January 2009, amounting to around Rs 14 crore. The Satyam promoters inflated revenue and profits to showcase a healthy picture of the company when PwC was its auditor.
Price Waterhouse had earlier approached the Supreme Court challenging Sebi's jurisdiction over auditors.
Price Waterhouse has, expectedly, rejected the charges brought out against it by Sebi while expressing its disappointment on the ban. The company was bought by Tech Mahindra, another outsourcing company.
Ramalinga Raju, founder and former chairman of the erstwhile software services exporter Satyam Computer Services, stunned Indian markets and investors in January 2009, when he admitted that the firm had overstated earnings and assets for several years, in a fraud of more than $1 billion sometimes referred to as "India's Enron".
"As we have said since 2009, there has been no intentional wrongdoing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary".
"They might lose a lot of business on the other sides, not just audit, and they have to report it in other jurisdictions". A senior chartered accountant said the impact of the SEBI ruling on the auditing business of PW network firms and others can not be assessed immediately.