PwC will not stand by its audited accounts on Satyam

14 January 2009

The erstwhile auditors of Satyam, PricewaterhouseCoopers, has said its opinion on the financials of the beleaguered company may be rendered "inaccurate and unreliable". The statement has come after the newly formed board has appointed two global auditing majors KPMG and Deloitte to restate its financials for the third quarter and the last financial year.

PwC is being investigated for failure to detect anomalies in Satyam's balance sheet, which, analysts say, could have easily been detected during the auditing. 

In a letter to the new board of Satyam, PricewaterhouseCoopers said the statement by the former chairman of the company B. Ramalinga Raju, admitting to a Rs70 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. 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," it said in a lengthy 3-page letter addressing the board of Satyam.

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.

The audit firm has hoped to work with the company and provide assistance to the new board of directors as clarifications and issues arise.