Slight correction but an important one.

Price Waterhouse holds a special place in the Indian business community due to their long presence in India, more than 100 years. They are grandfathered in to many of the rules that have been established more recently for others. In particular, Price Waterhouse can audit under the Price Waterhouse name in India, an exception to Section 190 of the Chartered Accountants and Regulation Act.
In addition, partners who retire from other firms are not permitted to hold positions in boards of companies that are audited by their former firm. Price Waterhouse India has done exactly the opposite. As soon as Amal Ganguli retired as a senior partner in 2003 and immediately he joined the boards of the companies he himself audited : HCL, NIIT,NDTV and Maruti –just to name a few.
Similarly Satyabrata Ghosh another retired senior partner joined the board of Global Trust Bank while his protégé Amal Ganguli signed the accounts. In the last year just before Global Trust Bank collapsed, Satyabrata Ghosh was a director of the bank while his own nephew Partha Ghosh a partner of the firm signed the accounts of the bank.
PwC Global performs lucrative non-audit work through an “independent” company called Pricewaterhouse Coopers Private Ltd. but the fig-leaf of independence falls off on two counts:
1) The three legal entities that conduct external audits of clients and are registered with the PCAOB in the United States, Lovelock and Lewes, Price Waterhouse and Co Bangalore and Price Waterhouse & Co Kolkata, are all licensed by the same parent PwC International, London, and
2) Ramesh Rajan is the Senior Partner of Lovelock & Lewes and Price Waterhouse and the Chairman of PricewaterhouseCoopers Private Ltd.

Francine

Slight correction but an important one.

Price Waterhouse holds a special place in the Indian business community due to their long presence in India, more than 100 years. They are grandfathered in to many of the rules that have been established more recently for others. In particular, Price Waterhouse can audit under the Price Waterhouse name in India, an exception to Section 190 of the Chartered Accountants and Regulation Act.
In addition, partners who retire frm other firms are not permitted to hold positions in boards of companies that are audited by their former firm. Price Waterhouse India has done exactly the opposite. As soon as Amal Ganguli retired as a senior partner in 2003 and immediately he joined the boards of the companies he himself audited : HCL, NIIT,NDTV and Maruti –just to name a few.
Similarly Satyabrata Ghosh another retired senior partner joined the board of Global Trust Bank while his protégé Amal Ganguli signed the accounts. In the last year just before Global Trust Bank collapsed, Satyabrata Ghosh was a director of the bank while his own nephew Partha Ghosh a partner of the firm signed the accounts of the bank.
PwC Global performs lucrative non-audit work through an “independent” company called Pricewaterhouse Coopers Private Ltd. but the fig-leaf of independence falls off on two counts:
1) The three legal entities that conduct external audits of clients and are registered with the PCAOB in the United States, Lovelock and Lewes, Price Waterhouse and Co Bangalore and Price Waterhouse & Co Kolkata, are all licensed by the same parent PwC International, London, and
2) Ramesh Rajan is the Senior Partner of Lovelock & Lewes and Price Waterhouse and the Chairman of PricewaterhouseCoopers Private Ltd.

Francine

I am working on my own post to update on new stuff. I also Tweeted both articles last night and got quite a few replies and re-tweets on them. You should check my Twitter more often. It’s where I address breaking news until I can do a longer post.
http://www.twitter.com/retheauditors

My post out later today. Not too much later.
Alwayas something new…They keep giving and giving.

Francine

Dennis H. had a nice post on this latest turn of events, and some nice things to say about you.

You should post a link, if you haven’t already done so.

– Tenacious T.

Fascinating information. It appears that –

1. Satyam pays audit fees to PW India and, in return, gets a Big 4 signature on the F/S.

2. PW India, who “has no manpower, and hence, as part of an internal arrangement gives out their work,” outsources the audit hours to Lovelock & Lewes.

3. Lovelock & Lewes, who is a “network firm of the international consulting body PwC,” apparently “has no authority to audit under PwC’s name.” That sounds like a bit of hair-splitting spin to me. PW India may have been responsible for the audit opinion, and chose to outsource the work to a member firm. That doesn’t necessarily mean that Lovelock & Lewes “audited” under PwC’s name.

4. Satyam pays PW India its fees, the PW partners book the fees and revenue under their names, then subsequently transfer the payments to Lovelock & Lewes. The metrics have been satisfied. If Lovelock & Lewes’ rates were significantly lower than PW’s rates, then engagement margins could have been quite nice, indeed. High revenue, high margins, no performance reviews — sounds like a dream engagement!

5. PW India, completely relying on the work of the other firm’s staff, signs the F/S. I wonder how they determined they could rely on the others’ work?

The more I learn, the more I just shake my head in bewilderment….

Thanks for the info.

– Tenacious T.