The auditors were required to follow the standard audit
procedures and requires to confirm the authentic of balance of cash and account receivables with the third party or external parties; however PCAOB has observed that the procedure and method followed for confirmation of balance amount of the cash and account receivables by the audit firm were not up to the mark and were not as per the auditing standards suggested by the board and failed to notice that the cash balances (bank balances) was materially overstated in the financial statements. And the management of Satyam used this confirmation as part of its scheme that inflates the reported cash balance around $ 1 billion. Here; auditor was required to follow the standards of PCAOB for confirmation of cash balance with banks; instead they trusted on management’s report that purported confirmation responses. The auditor did not make direct contact to the six banks of Satyam, and failed to test the existence and valuation of the Satyam’s reported cash balances. The Board also uncovered that; the method of quality control of the audit procedure is jointly administered of the five PW india firms that were failed to notice this lue fall in the standard practice of the cash confirmation process; so that penalty was imposed on all the five firms instead of only to PW Bangalore and Lovelock & Lewes by SAC & PCAOB. The penalty has been imposed under section 105(c) (5); “that provides that this section can be imposed in the event of (A) intentional or knowing conduct, including the reckless conduct, that results into a violation of the applicable statutory, regulatory, and the professional misconduct, (B) repeated instances of negligent conduct, each resulting in a violation of the applicable statutory, regulatory, or professional standard.” [8] Review of order of PCAOB and section imposed on the audit firm: The PCAOB (The Public Company Accounting Oversight Board) imposed penalty on all the five Pricewaterhouse Coopers International auditors firms that is based in India in order to settle an order against them and imposed penalty of $ 1.5 million against two of the five firms in connection with the audit of Satyam Computer Services who is India based IT service provider and additionally Securities and Exchange Commission also imposed penalty of $ 6 million against all the five firms. So; there is combined penalty has been imposed by SAC and PACOB against the registered accounting firm. These penalties have been imposed because there is violation has been made by auditing firms in compliance of the rules and standards of PCAOB and SAC. It is obvious that; the reliability of the capital markets is dependent on the auditors who require to fulfill their obligations towards investors and requires performing the robust audit as per standard procedures that result into well-founded audit reports.