Don't rely on our Satyam audit: PricewaterhouseCoopers
Posted on: 03:02 PM IST Jan 14, 2009
New Delhi: In a curious twist to the Satyam Computer Services fraud, its erstwhile auditors PricewaterhouseCoopers have said their opinion on the financials of the beleaguered company may be rendered "inaccurate and unreliable".
In a letter to the new board of Satyam, the audit firm said the statement by the former chairman of the company B Ramalinga Raju, admitting to a Rs.70 billion ($1.43 billion) fraud, may have material effect on the veracity of the firm's financial statements.Consequently, our opinions on the financial statements may be rendered inaccurate and unreliable, the three-page letter by the audit firm said.We wish to advise that the company should promptly notify any person or entity that is known to relying upon our audit report that our audit opinion should no longer be relied upon.In view of Raju's admission, the audit firm also advised the board to promptly commence an independent investigation as required under the US Securities and Exchange Act of 1934 to determine whether such illegal acts, indeed, occurred.We hope to work with the company and provide assistance to the new board of directors to address any issues that arise in the course of such investigation, to enable both the company and as your statutory auditors to full obligations under applicable law.The letter was sent to the new board comprising Deepak Parekh, chairman of Housing Development Finance Corp (HDFC), Kiran Karnik, former president of the National Association of Software and Service Companies, and C Achuthan, former member of the Securities and Exchange Board of India (SEBI), the markets watchdog.Earlier in the day, the three-member board appointed Deloitte and KPMG as the new joint auditors for Satyam in place of PricewaterhouseCoopers.After Raju's admission to the major fraud, the inability of PricewaterhouseCoopers in detecting it came under scrutiny with state investigation agencies conducting a raid on its premises at the upscale Jubilee Hills in Hyderabad Tuesday.The markets regulator is also probing the role of the former auditors in the scam. A team of SEBI officials had also checked the records of the firm in Hyderabad last week.