New Delhi: The Securities Appellate Tribunal (SAT) on Monday overturned SEBI's order barring Price Waterhouse from auditing listed firms for a period of two years due to its role in the Satyam Computer Services' fraud case.
Effectively, the order allows the affiliate firm of PwC India to continue auditing listed firm in the country, whereas SEBI has an option to move to appeal to Supreme Court.
In its order, SAT on Monday said that SEBI as a regulator has no "authority under SEBI laws and regulations" to look into the quality of audit services performed by the auditors.
Consequently, the SEBI order debarring PW firms as well as the two auditors from auditing listed companies was found unsustainable and was quashed.
Earlier, SEBI investigations had found that certain directors and employees of Satyam Computers (SCSL) had connived and collaborated in the overstatement, fabrication, falsification and misrepresentation in the books of account and financial statements of SCSL.
"The published books of accounts of SCSL contained false and inflated current account bank balances, fixed deposit balances, fictitious interest income revenue from sales and debtors' figures. The investigation also noted that the statutory auditors of SCSL had connived with the directors and employees of SCSL in falsifying the financial statements of SCSL," SEBI said.
SEBI had said that "firms practising as Chartered Accountant (CA) in India under the brand and banner of Price Waterhouse (PW) shall not directly or indirectly issue any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with SEBI under the applicable laws for a period of two years".
Individual auditors, the regulator added "namely, S. Gopalakrishanan and Srinivas Talluri, shall not issue an audit certificate or any certificate of compliance with respect to a listed company for a period of three years".
"Gopalakrishanan, Talluri and M/s. Price Waterhouse Bangalore shall jointly and severally disgorge the wrongful gains of Rs. 13,09,01,664/- alongwith interest @ 12% p.a. from January 7, 2009 till the date of payment".
SEBI said that the facts leading to the filing of the aforesaid appeals are that PW Bangalore was given the audit for auditing the books of accounts of Satyam Computers Services Limited (hereinafter referred to as "SCSL").