Thursday, January 8, 2009

Satyam Saga - Shame on Auditors - PwC

Satyam crumpled and so is the trust of investors on the figures as depicted in the Balance sheets of various Indian companies especially IT companies.

The entire episode has created furor across the investors and employees as the trust factor has been maligned, but do we have to blame the Board of directors only? I guess not. In my opinion when the auditors are there to operate and provide independent opinion, then they should do that only.

Downfall of Satyam is not actually shameful for the Board of Directors and Promoters, but also for the World of Auditors. What were the Internal and External Auditors doing for letting this shameful incident materialize? Are not they also party to the downfall?

In my opinion, PwC's (The Auditors in this Case) license to operate as Auditor must be cancelled with immediate effect. The independence of PwC Auditors was certainly impaired and the act has proven as breach of trust that investors and market regulators lay on the Auditors.

It is not only that the Corporate Governance at Satyam failed, it is also that the Auditors compromised and let a company hit dirts.

Certainly PwC must meet the fate of What Anderson met after Enron.


  1. do agree with you as it just aint the Board of directors or CEO who should be brought to justice but the Auditors too as even after knowing what was happening they decided to stay mum... there definately would be some reasons behind that but then auditors should do what they are hired for & should not circum under any pressure what so ever or else it shld be reported to the proper authorities when the same was known..

    There is a good amount of possibility that over these many years there would be some kind of mutual understanding between the auditors & the Board of directors because of which the same was hidden for so many years without any one knowing about it .Surprises me

  2. I doubt your conclusion that PwC be ashamed of their actions, i have worked for them and for sure realized in the meantime that the books presented to PwC were not faked and the results have been manipulated after the audit.

    Who are you to conculde about the cancellation of the license? Many things have been tampered with after the audit was conducted. Without getting into the details i advise not to get into conclusion.


  3. Yes, I have been a CA with PWC with articleship ttaining with them. The standards set in my years with PWC betweem 1976 to 1984 were excellent and I am proud of PWC.
    However, I have seen PWC in operation sitting at the other side of the table between 1993 to now and find their standards pathetic.
    I think, now,it is more that they have to finish the audit within timeline budgets. As a CFO, I know that if I had been of a crooked nature , I could have easily let them up the garden path. It would have been ridiculously easy. They are more interseted in completing the audit with a top down approach, thanks to the influence of the west. Pure plain vouching with clean conscience and basic above average ( just above mind you)intelligence would reveal everything. This top down approach with many fangled new mannagement concepts and compuer aided audit is the root causer of this situation. Nowadays, they simply cannot understand the dynamics of business. They want to submit to their seniors the working papers and think their job is done. Pathetic state.
    Ram Venkat

  4. Aslam,

    Hope you read this.....

    PwC has a history of cases of this nature....

    BCCI in England declared Bankrupt in 1991, had PwC as the Auditor and for the misrepresentation of figures for 1988-90, PwC was fined huge amount. Incidentally the figures were not tainted after audit and the scam was The Biggest Scam of that time.

    3 Years back Global Trust Bank (GTB) went to tenterhooks because of NPAs, PwC was the auditor and certainly that can't be forgotten....the case is still under Investigation by ICAI (I dunno why for 3 years)

    Do you want more information on this side?? I can furnish you that.....

  5. PWC should be shut down by financial powers all over the world, i know some of PWC auditors, real unimpressive bunch of people,with deadlines on their minds, could not believed that those goons were hired by pwc.

    shame on you pwc

  6. In my opinion, PwC should be shut down. They really do have enough of a history (as a conglomeration of partnerships all working under the PwC brand...) of this crooked kind of scandal, that they need to be looked into very closely! I worked for PwC USA for a short time, and can tell you that tax is as bad as audit! They were crooked, cut corners, wasted tons of time and client money repeating work and reinventing the wheel, and the corporate culture was downright pathetic (cronyism, immaturity, and childishness, among other things). I was so turned off, and found the same to be true of the other big 4, I totally changed career paths--I like to be able to look at myself in the mirror and sleep well at night--couldn't do it knowing what was going on with all the crooked crap at work!