Embroiled in the Satyam scam, auditing firm Price Waterhouse's assurance leader Thomas Mathew - a top executive in the organisation's hierarchy stepped down from his position on Tuesday with immediate effect. The firm also suspended S Gopalakrishnan and Srinivas Talluri, the two arrested partners in the Hyderabad office of the company, from their positions until investigations into the scam are completed.
In a statement, PW said Mathew resigned because "in light of the present situation, he believes that it would be appropriate for him to relinquish his management position." The firm would appoint a new assurance leader in the near future though Mathew would continue to be a partner with PW.
In auditing terms, an assurance leader is one who oversees the firm's audit practices, policies and procedures, growth and quality control. Industry experts said that this was the reason why Mathew decided to tender his resignation at this stage.
There are three lines of business in PW: advisory, audit/assurance and tax. Mathew was head of audit/assurance, which looks into the audit part of a firms operations. This role played by his department could well be the reason behind his stepping down as the leader, said an industry source.
In 2002, in response to the Enron fiasco, Mathew had reportedly pointed out the need for audits through the year as against making it an annual exercise, which continues to be an industry trend to date.
Referring to the suspension of Gopalakrishnan and Srinivas, Price Waterhouse said the partners were suspended in the light of the recent allegations and would play no part in client matters too. The two were arrested on January 24. Their signatures have appeared on the balance sheets of Satyam that Raju in his January 7 confession had said were inflated. While Gopalakrishnan has signed Satyam's balance sheets until the year 2006, Srinivas Talluri's signature appears in the 2007-08 balance sheet.
The two arrested partenrs have been advised to cooperate fully with the ongoing inquiries regarding Satyam. "As the investigations proceed, PW will continue to evaluate the situation," the release said.