From the Economic Times of India:
PricewaterhouseCoopers (PwC) auditors manipulated Satyam Computers accounts for money. According to Crime Investigation Department (CID) sources, Satyam founder B Ramalinga Raju and former chief financial officer (CFO) Vadlamani Srinivas confessed that the auditors of PwC were aware of the fraud and very much involved in executing it.
"Five banks, including HDFC Bank and BNP Paribas, replied to our queries saying that the reconciliation statements of the fixed deposits shown by Satyam Computers at auditing were not issued by them," a CID officer, who is part of the investigation team, told TOI on Sunday.
According to CID sources, S Gopala Krishnan, who was the auditor for Satyam Computers on behalf of Price Waterhouse between 2000-2001 and 2006-2007, and Srinivas Talluri, the auditor for 2007-2008 fiscal, were well aware of the fraud.
"The auditors falsified accounts," the CID officer said.
During the grilling by CID officials, Rajus and their CFO V Srinivas reportedly told their interrogators that they had paid handsomely for manipulation of accounts.
"The normal charges could be about Rs 1.5 crore per month," a source said.
It doesn't look good.
It's also the glaringly obvious explanation of how it happened.
Tomorrow the House of Commons Treasury Select Committee have a hearing on auditing. They're wondering how auditors are independent when they take fees for other services from clients.
It may not be fraud, but cash always distorts objectivity.
A new system of auditing is essential.
Hat tip to Dennis Howlett
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
This isn’t good for PWC. It was this kind of thing that removed Arthur Andersen from the Big 5. Maybe fraud in India isn’t as important as fraud in the USA in the eyes of the world. But India’s is not a trivial economy either. I don’t think the game can continue with just three players.
James
You’re right
This might be curtains for the profession as we know it
With the banks on their way out too it’s time for a fresh start
Thank goodness we still have states that can facilitate the reconstruction that markets can’t deliver
Richard
I fear history shows that even failing professions are almost impossible to kill.
Lets look at actuaries a group of professionals which has:
Played the lead role in the destruction of the final salary pension scheme market,
Allowed the inappropriate pricing of endowment policies, thereby destroying the economic benefit of real investment accompanying investment in the non productive retail housing market.
And presiding over the collapse of UKPI, Equitable and others.
Yet still they are there, and why. Because, UK law gives them a sinecure where certain activities have to be undertaken by people with a certain collection of initials after their name.
Accountants will live on claiming their ability to interpret financial runes (which they create) and signing off accounts as being compliant with the rules while ignoring the need to detect mismanagement or fraud at any level.
Perhaps a bonfire of the professions might be an interesting way to start reconstructing the economy?