PriceWaterHouseCoopers???

Once upon a time, not so long ago, there were "Big Five" accounting firms. Arthur Andersen was one among them. Others in the list were Price WaterHouse Coopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG.

Them when the Enron scandal broke in the year 2001, this Arthur Andersen firm, who were auditing Enron's accounts then, was found guilty of the financial scandal. Later they voluntarily surrendered their CA license and went out of business. Thus the number was brought down as "Big Four"

Now after the Ramalinga Raju's confession and the Satyam Computers scam, the Price WaterHouse Coopers who are auditing Satyam's accounts, are under the same threat. The Institute of Chartered Accountants of India (ICAI) has already issued a show cause notice to the accounting firm. If proved (whats more to get proved!??) PwC will have to face the same fate as Arthur Canon.

Though the accounting firm says Satyam auditing was done with regular Auditing Standards and were supported with appropriate audit evidences, I personally feel, atleast few people in the PwC must have been aware of this fraud.

Its really sad to see how a mistake (ofcourse a big mistake) by very few people, can bring down the reputation.

A lesson for everyone...

Ramalinga Raju and The Satyam Scam

Today's sensational news in the Indian IT industry and the Indian Share market is the resignation of Ramalinga Raju from the Chairman post of Satyam Computers.

The Satyam shares which were already going down (after the World Bank ban), fell tremendously after this news. The price of a share in the morning was about Rs. 180/- and in the evening its just above Rs 35/-

In his resignation letter to the board, Ramalinga Raju had admitted that the Satyam's balance sheets was inflated to Rs. 5040 crores, which was actually very less.

The letter says, how all the attempts to fill this fictitious assets with real ones failed and then comes the punch line - According to Raju, none of the other Board Members had the knowledge of the real situation.

Poor Raju. In every board, whenever a problem comes, there will be one scape goat and in this issue, its Ramalinga Raju. Even without any SEBI/CBI interrogation, Raju have come out himself, admitting his faults - (though there was no other gentleman option for him). Not many in our country have this courage. In that aspect, Raju is a gentle man.

If at all that Maytas acquisition had happened smoothly, Satyam wouldn't be in this bad condition.

by the way, I can surely tell Satyam is not the only company with this problem. If SEBI audits all company's books - there will be many more Satyams. Even bigger ones might exist.