Top audit firm banned for failing to detect major fraud
PricewaterhouseCoopers (PwC), one of the leading accounting firms in the world, has been handed a two-year auditing ban for companies listed in India after it failed to spot a $1.7 billion fraud at Satyam Computer Services.
What you need to know:
- Mr Paul Bwiso, the chief executive officer Uganda Securities Exchange, said he had not read the India story and could not comment.
KAMPALA. PricewaterhouseCoopers (PwC), one of the leading accounting firms in the world, has been handed a two-year auditing ban for companies listed in India after it failed to spot a $1.7 billion fraud at Satyam Computer Services.
PwC Uganda is one of the branches of the global PwC establishment and has been operating in Uganda for more than 50 years, serving a broad spectrum of clients, including government and the private sector.
The India incident has, however, caused a bit of concern in Uganda given that PwC is one of the firms that audited the Crane Bank books of accounts before it was taken over by Bank of Uganda (BoU).
This newspaper understands that Crane Bank was at some point audited by KPMG, PwC and Deloitte and Touch.
The audit by external lawyers is a requirement under regulation 4 (2) of the Financial Institution (External Auditors) Regulations, 2010. The PwC January 13, 2017 report on Crane Bank is now a subject of a court case in which BoU and Mr Ruparelia sued each other .
The forensic investigation was requested by BoU after taking over the operations of the bank in October 2016. Crane Bank’s assets were handed over to dfcu Bank. The inventory of assets and liabilities conducted by PwC, according to BoU however, confirmed that erosion of capital was caused by non-performing loans.
Before BoU decided to take over the management of Crane Bank, the financial institution had, for years, been receiving a clean bill of health from auditors that include PwC.
The Auditor general has in the past used the firm to audit government departments and agencies.
When contacted yesterday, Ms Doreen Mugisha, the PwC Uganda’s clients and marketing manager, acknowledged being aware of what happened to their sister firm in India.
Ms Mugisha promised to provide more information today about how her company would continue operating in Uganda without being implicated the same way as their sister company in India.
Mr Paul Bwiso, the chief executive officer Uganda Securities Exchange, said he had not read the India story and could not comment.
The ban handed to PwC India was announced by the Securities and Exchange Board of India because it had failed to check “glaring anomalies” in the financial details reported by the now defunct Satyam.
The revelations
The fraud persisted in part because Satyam’s auditor, PwC, “did not independently check the veracity of the monthly bank statements”. It relied upon assurances from Satyam “without any further examination and ignored the balance confirmations received directly from banks which were showing true balances”, the report said.
