PWC – were they party to and part of the Satyam fraud?

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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