PwC Chairman has said that the professional services firm will undertake measures to review how it can better detect frauds after a number of scandals, including Wirecard, rocked the industry. PricewaterhouseCoopers (PwC) was the independent auditor of Satyam Computer Services Limited when the news of the scandal surfaced.
PwC India was fined $6 million by the SEC (US Securities and Exchange Commission) for not following the code of conduct and auditing standards in the performance of its duties related to the auditing of the accounts of Satyam Computer Services
Bob Moritz said that the firm wants to ensure that it is moving forward on the detection of fraud to "ensure the relevance of the profession". The audit industry has drawn widespread criticism after the revelation of a series of high-profile corporate failures and accounting scandals, latest being German payments processor Wirecard in June 2020.
Wirecard grew exponentially over the years and became Europe’s biggest competitor to the Silicon Valley giants. The company, however, was hit by a scandal in June after it said that 1.9 billion euros ($2.1 billion) had been missing from its accounts.
Also Read: Wirecard crisis | All you need to know about the scandal
This led to a 98 percent fall in its share price and the arrest of its former CEO, Markus Braun, on the ground of suspected falsification of accounts and money laundering.
"Wirecard is yet another example of the fact we need to look at this and do it aggressively over the next few years," Financial Times quoted Bob Moritz as saying.
Satyam scam called into question the role of auditors under whose nose, promoter Ramalinga Raju perpetrated a monumental fraud by forging bank fixed deposit receipts.
In 2018, the Securities and Exchange Board of India (SEBI) had barred Price Waterhouse, an arm of PricewaterhouseCoopers India, from auditing any listed companies in India for a period of two years. However, the Securities Appellate Tribunal (SAT) in September 2019 overturned SEBI's order.
"SEBI has no authority to look into the quality of audit standards and audit services," SAT had said, adding that it can only take remedial and preventive action, and the move to bar the auditor is neither. The Supreme Court on November 18, 2019, stayed the SAT order.
The fraud at erstwhile Satyam Computer Services came to light on January 8, 2009, after the company's founder Raju publicly admitted to cooking the books to the tune of Rs 5,004 crore over a period of time, shocking the global corporate community. A SEBI probe had found that the scam was much larger at Rs 7,800 crore. Nearly 94 percent of the reported cash reserve of the company had been fictitious.
Raju was arrested by the police in January 2009, along with his younger brother B Rama Raju and got bail from the Supreme Court in 2011, as the CBI failed to file a chargesheet.
The market regulator slapped a fine of Rs 1,849 crore on Raju and barred him from the markets for 14 years. In 2015, Raju and nine others were found guilty under various counts of the Indian Penal Code and sentenced to seven years in prison by a Hyderabad court.