India’s Securities Appellate Tribunal has reversed the order issued by the Securities and Exchange Board of India (SEBI) which banned PwC from auditing listed companies for two years from January 2018 as a result of its role as auditor of the failed IT firm Satyam Computer Services.
Investigations by SEBI had found that certain directors and employees of Satyam had connived and collaborated in overstatement, fabrication, falsification and misrepresentation in the firms accounts and financial statements. SEBI also concluded that the auditors had been involved in these deceptions.
However, the Tribunal has ruled that there is no evidence that the auditors were in collusion with the management at Satyam and, further, that SEBI did not have the jurisdiction to ban any audit firm, saying that such a move was the prerogative of the Institute of Chartered Accountants of India (ICAI).
The Tribunal did find that PwC auditors ‘had failed to exercise care and prudence and adhere to the standards and procedures’ and that disgorgement of audit fees had been an appropriate step but ruled that negligence cannot amount to misconduct.