PwC faces deeper scrutiny over Satyam
Audit was carried out by subsidiary Lovelock & Lewes
PricewaterhouseCoopers is facing increased scrutiny over its supervision of
audits carried out by subsidiaries in India after a creative accounting scandal
at its IT services client Satyam.
Satyam’s audit was carried out by a subsidiary to its main operation called
Lovelock and Lewes, the Guardian reported. Satyam’s founder admitted to
falsifying the accounts, creating cash and other assets of more than £1bn.
The subsidiary was attached to the old Coopers & Lybrand network, with
whom PwC merged in 1998. PwC passed on the Satyam job because it is not allowed
to carry out audits using its international brand name under Indian law.
PwC argues that its Indian practice is a separate legal entity from the
international firm, and therefore would not be included in any litigation
brought against the Indian firm. But this does not preclude liability to class
actions that might be brought against the firm by aggrieved investors.