Wednesday, January 14, 2009

PWC and the Satyam Scandal

I'm still scratching my head about the Satyamin cash in the bank and were reporting $1.1 billion. The easiest thing to find out in auditing is cash on hand. In fact it is the first thing one is taught in auditing.

All one has to do is get all the original bank statements, look at the end-of-year balance, add it up and that's what you have. There is no excuse to miss this number, least of all misreport it by $950 million.

India rightfully came down harshly on banks who were involved in the securities scandal in India many years ago. Credit Suisse lost its license. Its important to do a full investigation into PWCs role.

Only by threatening the survival of an auditing firm can we ensure they will comply by the law and do what they are paid for.

PWC needs to either show that it was not negligent or like the banks, it should get its India license revoked. This is the only way to send a message that the nation is serious, to improve transparency and ensure that auditors do their jobs properly and protect the interests of shareholders above the interests of the company at all times.
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