SEBI ban on PW may hit audit of 77 firms, including Tata Steel, Hindalco

Tanya Thomas Mumbai | Updated on January 11, 2018 Published on January 11, 2018

In FY17, the PW network earned over ₹81 crore in audit fees from its listed clients

SEBI’s order banning the Price Waterhouse network of audit firms (PW firms) from auditing listed clients for two years will affect 77 NSE-listed firms, according to data compiled by Prime Database.

For the current financial year, PW firms — including Dalal & Shah and Lovelock & Lewes — are statutory auditors to 77 firms listed on the NSE. This includes heavyweights such as Hindalco Industries, Tata Steel, Ashok Leyland, IDFC, IndusInd Bank and Reliance Capital.

While the revenue impact the ban will have on PW firms’ India operations is uncertain, data shows that in FY17, the audit firm network earned upwards of ₹81 crore in audit fees from its roster of listed clients.

India was among the fastest-growing markets for audit and advisory giant PricewaterhouseCoopers (PwC), recording almost 20 per cent growth in revenue in FY16. PW network firms in India are either members of or connected with the UK-based PwC. The global firm does not reveal revenue by country. PwC reported over $37 billion in global revenue in FY17.

Disappointed by decision: PW

A press statement from the network of PW firms in India said: “We are disappointed with the findings of the SEBI investigations and the adjudication order. 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. As we have said since 2009, there has been no intentional wrong-doing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary. We believe that the order is also not in line with the directions of the Hon’ble Bombay High Court order of 2010 and so we are confident of getting a stay.”

A query from BusinessLine regarding the ban’s impact on PW firms’ audit business in India did not elicit a response.

The protracted dispute with SEBI regarding its liabilities in the Satyam Computers accounting scam is the latest in its controversial history in India. Last year, PwC’s former CFO Sarvesh Mathur accused the firm of falsifying accounts, evading taxes and breaking laws. In 2013, PwC was pulled up by tax authorities for helping Finnish phone-maker Nokia evade taxes.

A couple of weeks ago, a US federal judge found PricewaterhouseCoopers negligent in failing to detect fraud that led to the collapse of Alabama’s Colonial Bank during the 2009 financial crisis.

Published on January 11, 2018

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