PricewaterhouseCoopers, auditors of Satyam for over eight years, has informed the scam-ridden IT firm's new board that its audit of the company's financials could be 'inaccurate and unreliable' in view of the financial irregularities disclosed by Ramalinga Raju.
PricewaterhouseCoopers, auditors of Satyam for over eight years, has informed the scam-ridden IT firm's new board that its audit of the company's financials could be 'inaccurate and unreliable' in view of the financial irregularities disclosed by Ramalinga Raju.
Noting that it has been auditing Satyam Computer since the quarter ended June 2000 till September 2008; PricewaterhouseCoopers said that all those financial statements were prepared by the management. It further said that it relied "on management controls over financial reporting, and the information and explanations provided by the management, as also the verbal and written representations made to us during the course of our audits."
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Satyam as well as PwC are the subject of regulatory and government investigation into the country's biggest corporate fraud - involving Rs 7,800 crore - disclosed by Satyam founder Ramalinga Raju.
Raju, his brother Rama Raju and Satyam CFO Vadlamani Srinivas are in judicial custody now.
"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 investigations to enable both the company and us as your statutory auditors to fulfil obligations under applicable law."
Copies of the letter, dated January 13, were also sent to RoC Hyderabad, SEBI, RBI, Central Board of Direct Taxes, BSE, NSE and NYSE.
Earlier on January 7 the then Satyam Computer chairman Ramalinga Raju had stated that the financial statements of the company have been inaccurate for successive years.
In view of Ramalinga Raju's letter PwC said we hereby in accordance with the guidance note state that our audit reports and opinions in relation to the financial statements for the audit period should no longer be relied upon.
The audit firm further added: The contents of the said letter even if partially accurate may have a material effect which effect is currently unknown and cannot be quantified without a thorough investigation on the veracity of the company s financial statements presented to us during the audit period.
Consequently our opinions on the financial statements may be rendered inaccurate and unreliable.
The statement by PwC comes in the wake of the chartered accountants body ICAI constituting a six-member special committee to look into the auditing of crisis-hit Satyam Computer whose disgraced founder chairman Ramalinga Raju has confessed to fudging accounts.
In accordance with the generally accepted accounting standards in the us PwC said we advise that the board of directors of the company should ... commence an independent investigation pursuant to Section 10a of the United States Securities and Exchange Act ... to determine whether such illegal acts occurred and if so their nature and extent.
We wish to advise that the company should promptly notify any person or entity that is known to be relying upon or is likely to rely upon our audit report that our audit opinion should no longer be relied upon. Yesterday Andhra Pradesh police had conducted searches at the offices of PwC in Hyderabad.
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