Thank you, thank you, thank you to the folks at TechMarketView for finding the most inane testimony yet in the still amusing Satyam fraud saga.
The story, and you’ve got to read the source document in The Times of India, is a hoot. If I got this right, the Chairman & CEO of PWC India is maintaining that:
- they didn’t have any staff in their PW office in Bangalore so they outsourced the auditing of the Satyam balance sheets to another auditing firm in the same building as theirs in Bangalore
- the outsourced auditors, Lovelock and Lewes, apparently signed the PW name on the financial statements of Satyam
- the audit fees for Satyam were paid to PW Bangalore and then passed onto Lovelock and Lewes
- other PW partners (from Delhi and Kolkata) have testified that they don’t have anything to do with the PW Bangalore operation
Now, if you go to PWC’s global website for Indian offices, look at these two sequential listings:
The PWC offices in Bangalore
So who did Satyam contract their audit work to anyway? Did PW Bangalore have a duty to Satyam shareholders, investors and the business community to report that another did their work for them? How would anyone have known that this occurred? How common is this outsourcing practice?
Are these two firms really separate? How would anyone know differently? And, who hires an audit firm that has no staff? Now, that one item (i.e., hiring an auditor bereft of staff) should get any CFO fired and jailed. Honestly, didn't anyone do any due diligence on these people? Didn't someone notice something different about the 'auditors' business cards? But, even more amazing is that any audit firm would let another firm do its work and sign its reports. Are we really supposed to believe this story?
Seriously, last week while I was teaching Point of View Selling to a class of software executives, I used a humorous case study involving the mythical accounting firm: PATSY (Price Arthur Touche Sells and Young). Looks like my material wasn’t as creative as what some auditors are trying to sell to Indian investigators and clients.
This sort of fantastic tale that was woven before Indian investigators tells me that the audited financial statements of an Indian firm, even a supposedly reputable one, may not represent the work of the auditor or the true position of the firm audited. Talk about a no-confidence signal.
It’s high-time PWC crack the whip on those in its Indian operation. Stunts like this make the profession and Indian business in general look like a joke (and no one's laughing).