US accounting watchdog sanctions Satyam's auditors
March, 18th 2010
The US accounting watchdog has imposed sanctions against two Indian auditors who were affiliated with PricewaterhouseCoopers after they failed to detect at multi-year fraud at technology services company Satyam Computer Services Ltd.
Satyam, since renamed Mahindra Satyam was hit by India's largest corporate scandal when its founder and chairman quit in January 2009, revealing profits had been overstated for years.
An Indian affiliate of PwC called Lovelock & Lewes had been Satyam's auditors at the time. The Public Company Accounting Oversight Board (PCAOB), a US agency responsible for monitoring audit firms, said it would bar two accountants responsible for the Satyam audits from "being an associated person of a registered public accounting firm," according to documents dated March 16.
The PCAOB, which was given authority to investigate audit firms as part of the 2002 Sarbanes-Oxley reforms, said the auditors, Siva Prasad Pulavarthi, 43, and Chintapatla Ravindernath, 38, had not cooperated with a PCAOB investigation into the fraud.
Prasad and Ravindernath, who were each engagement managers on Satyam's audits for several years, resigned from Lovelock in January 2010 and around the same time said through their attorneys they would not comply with the PCAOB's demands for their testimony, according to the PCAOB documents.
Attorneys for the two auditors could not be immediately located, but the PCAOB documents said the two had submitted settlement offers to the Board, without admitting or denying their role, and consented to the sanctions.
The fraud, in which Satyam's founder revealed he had overstated the company's cash balance by $1 billion, left Satyam struggling for survival.
In April 2009, Tech Mahindra won an auction for a controlling stake in the troubled company.
PricewaterhouseCoopers said in January 2009 that all Satyam audit reports from 2000 through 2008 should no longer relied upon.