Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help!!!!!! Satyam Company was audited by PricewaterhouseCoopers (PwC). The company was convicted of accounting fraud, and the auditors were punished for not uncovering

I need help!!!!!! Satyam Company was audited by PricewaterhouseCoopers (PwC). The company was convicted of accounting fraud, and the auditors were punished for not uncovering the fraud (Abrams, 2018).

PwC appealed the ruling, stating that it had no knowledge of the fraud (Abrams, 2018).

I have recently been hired by PwC. As part of my employment, I possibly may be required to work outside of the United States. Because I have been worked in other countries, I have been asked to review this article and to decide if whether I agree or disagree with PwC. In addition, I need to support with documentation from the Satyam case and information from three other credible sources.

The article

"MUMBAI--India's market regulator has banned PricewaterhouseCoopers' affiliates from auditing listed companies for two years as punishment for their failure to detect a billion-dollar fraud at outsourcer Satyam Computer Services Ltd.

PwC was in charge of checking Satyam's accounting during the period its founder admitted, in 2009, he had padded revenues by close to $1 billion by inflating sales and forging bank documents.

The founder, Ramalinga Raju, and his brother Rama Raju, who was managing director of the company, were sentenced to seven years in prison in 2015 for the fraud. Their disgraced company --once one of the top software and outsourcing companies in the world--was bought by Tech Mahindra Ltd.

In its 108-page ruling released late Wednesday, the Securities and Exchange Board of India said PwC's punishment should act as a warning to accountants that get too close to their clients.

"It is incumbent on SEBI to take a stern view of market abuse and fraudulent practices, particularly when persons tasked with protecting the interest of investors are themselves hand-in-glove with the main perpetrators of the fraud," the ruling said.

PwC said its accountants were duped and it is confident it can reverse the order in court.

"The SEBI order relates to a fraud that took place nearly a decade ago in which we played no part and had no knowledge of," it said in a statement. "We have however learned the lessons of Satyam and invested heavily over the last nine years in building a robust and high-quality audit practice," the company's statement said.

The SEBI also ordered PwC and two of its accountants to pay 131 million rupees ($2 million) plus interest, for what it said were "wrongful gains" related to its auditing of Satyam.

The accountants--S. Gopalakrishnan and Srinivas Talluri--were also sentenced to seven years in prison in 2015 for the scam. At the time, PwC said that it was disappointed by the verdict and that there was no evidence the partners had knowledge of the fraud."

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Practicing Financial Planning

Authors: Sid Mittra, Anandi P Sahu, Brian Fischer

12th Edition

9386042851, 9789386042859

More Books

Students also viewed these Accounting questions

Question

2. In what way can we say that method affects the result we get?

Answered: 1 week ago