PwC party to falsification of Satyam accounts: SFIO
April, 18th 2009
Holding global auditors Price Waterhouse guilty of wrongdoings in the multi-crore Satyam scam, the Serious Fraud Investigation Office has informed the government that the bookkeepers were involved in falsification of accounts of the IT firm.
Detailing the role of Price Waterhouse partners in the scam involving thousands of crores of rupees, the probing arm of the corporate affairs ministry has concluded after a three month-long investigation that the auditors kept silent despite knowing about the failure of the IT firm's audit system in 2007.
No official comments could be obtained from the agency, while a PW spokesperson did not respond to e-mail as well as telephonic queries. Earlier, PW had said that it had done no wrong and followed all the standard practices and relied on the information given by the management for auditing purpose.
The SFIO had submitted to the government a voluminous report running into over 14,000 pages, where it has alleged that the two PW partners working on Satyam account -- S Gopalakrishnan and Talluri Srinivas -- were guilty of account falsification.
The auditing firm has already dissociated itself from the two partners, who were earlier arrested by Andhra Pradesh police and are now being probed by various agencies.
Former Satyam Computer CFO Vadlamani Srinivas had earlier told ICAI -- apex regulatory body for chartered accountants - that the auditors had no role in the fraud and they were given forged documents by the management for audit purposes.
SFIO concluded that the two auditors were involved in the fraud after the feigned ignorance about their ability to question the authenticity of the documents provided to them.
"The auditors are supposed to get the confirmation from banks and others. They cannot follow everything said by the management for so many years," sources informed.
The SFIO findings also pointed out that the auditors knew of the audit system's failure through a report generated by Satyam's own systems department in 2007. This report pointed out that fake invoices could be generated in the system, but the auditors still continued to verify the audit system as correct.
This particular report showing a failure in audit system was not put out before the Satyam's audit committee.
The government had ordered an SFIO probe in the Satyam scam on January 13 -- within days of Satyam founder B Ramalinga Raju admitting to financial wrongdoings at the company.