MUMBAI (Reuters) - An Indian tribunal on Monday overturned an order by the market regulator banning the Indian affiliate of accounting giant PwC from auditing listed companies in the country for two years over its role in a nearly decade-old accounting fraud case.
Price Waterhouse (PW) was the auditor for the erstwhile software services exporter Satyam Computer Services, whose founder admitted in 2009 that the firm had overstated earnings and assets for several years.
The Securities and Exchange Board of India (SEBI) last year barred all entities practicing as chartered accountants in India under the Price Waterhouse brand from auditing listed companies over the firm’s role in the fraud of more than $1 billion, referred to as “India’s Enron”.
In a ruling on Monday, the Securities Appellate Tribunal (SAT) said there was “no shred of evidence” to show that the audit firm had fabricated or falsified Satyam’s books in collusion with the top management.
“In our opinion, the approach adopted by the WTM is patently erroneous and is flawed,” SAT said, referring to the 108-page order by a SEBI whole-time member (WTM) in January 2018.
SEBI and PwC did not immediately respond to requests for comment. After the ban, PwC denied any involvement in the fraud.
In India, PwC audits under the Price Waterhouse brand, with a network of local firms operating under the banner. The broader PwC entity handles consulting, tax advisory and other services.
SAT said that the ban affected 98 partners of Price Waterhouse, 70 of whom were not part of the firm during the period of the fraud.
The tribunal also said it took “nine long years” for SEBI to complete the proceedings, during which time the audit firm adopted “extensive remedial measures” and audited companies “without any blemish.”
“Thus looking from this angle also, the order of debarment was not the appropriate choice,” SAT said.
SAT said there was no doubt about professional negligence by the auditors but that such misconduct should be handled by the Institute of Chartered Accountants of India (ICAI).
Reporting by Abhirup Roy, editing by Deepa Babington