Hyderabad: Price Waterhouse auditors “intentionally” failed to apply certain audit standards

to Satyam Computer Services Ltd, enabling the firm’s founder B. Ramalinga Raju and others
to perpetrate India’s largest accounting fraud, the country’s federal investigative agency, the
Central Bureau of Investigation (CBI), has said in its latest findings.
The findings, which have been reviewed by Mint, form the basis for the agency’s claim, in its
supplementary charge sheet, filed on 24 November, that it had further evidence on the role of
Price Waterhouse auditors in the fraud.
The agency’s findings are based on its study of audit
standards applied by the same Price Waterhouse auditors
involved in l’affaire Satyam while auditing the accounts of
another Hyderabad-based listed software firm, Infotech
Enterprises Ltd.
Price Waterhouse partners S. Gopalakrishnan and Srinivas
Talluri, who had signed off on the accounts of Satyam for
eight years till the accounting fraud came to light in
January, were also found to have signed off on accounts of
Infotech Enterprises for several years till March.
PricewaterhouseCoopers Ltd India executive director Jairaj
Purandare said his firm was yet to receive a copy of the
charge sheet and could respond to the charges only after
obtaining legal advice.
CBI, which is investigating the fraud at Satyam—Raju
confessed on 7 January to overstating the software outsourcer’s accounts by at least Rs7,136
crore—said in its supplementary charge sheet that it had found evidence of an additional
Rs4,739 crore fraud at the company.
Tech Mahindra Ltd, part of the Mahindra group, gained a controlling stake in Satyam in an
auction conducted in April.
CBI had, in its first charge sheet on 7 April, accused Ramalinga Raju, his elder brother and
then managing director B. Rama Raju, younger brother and director of SRSR Advisory
Services Pvt. LtdB. Suryanarayana Raju, and the then chief financial officer Srinivas
Vadlamani of perpetrating the fraud. Satyam’s auditors, Price Waterhouse’s S.
Gopalakrishnan and Srinivas Talluri, also figured among the accused.
Three former senior officials of Satyam are also among the accused: vice-president G.
Ramakrishna, senior manager D. Venkatapathi Raju, and assistant manager C. Srisailam. All
the accused except Suryanarayana Raju, who obtained bail, are in judicial custody in the
Chanchalguda Central Prison in Hyderabad.
In its latest findings, CBI said that while the same Price Waterhouse auditors, in an effort to
ascertain the authenticity of sales invoices raised by Infotech Enterprises, had collected the
live invoice samples directly from the relevant computer systems while conducting the
statutory audit, they had not done so in the case of Satyam.
In the case of Satyam, CBI added, the auditors preferred to rely upon hard copies supplied by
the key accused.
Similarly, in the case of Infotech Enterprises, the auditors had obtained direct confirmation on
the requisite pro-forma from the bankers and also reviewed online the current account
balances of the firm.

in fact.sukumar@livemint.” The System Process Audit Team at Satyam had. In an unreleated development PricewaterhouseCoopers announced on Monday the appointment of Gautam Banerjee as chairman of PricewaterhouseCoopers India network of entities.com . who resigned as chairman last week. showed their “underlying conspiracy” with the other key accused in the accounting fraud. Instead.In the Satyam case. the agency said.” according to CBI’s findings. The “blatant deviations” adopted by the auditors auditing Satyam accounts. warned both the Price Waterhouse auditors that “these deficiencies are significant in nature which can affect the genuineness of the financial statements of the company and hence reliance cannot be placed on the IT system controls. The agency also said both auditors “paid no heed to the findings of the System Process Audit Team” which had pointed out “several IT system control deficiencies. the auditors had “wrongfully presented to the audit committee that the system control deficiencies are insignificant”. had written directly to the debtors and vendors while conducting the audit at Infotech Enterprises but “failed to adopt similar protocol” while auditing Satyam. the auditors “relied upon forged bank confirmation letters supplied by the other accused while conducting the statutory audit“ and also failed to verify the company’s current account balances online. The auditors. CBI added. CBI said. He replaces Ramesh Rajan. c. CBI has accused the auditors of taking part in the conspiracy by failing to inform the (company’s) audit committee about the system control deficiencies that were “significant in nature”. CBI also claims to have found evidence of Talluri directing his team members to “discontinue the procedure of obtaining the confirmations from debtors and vendors in respect of Satyam Computer Services Ltd from September 2007 onwards”. Price Waterhouse is one of PricewaterhouseCooper’s audit arms in India.