The global auditing firm PricewaterhouseCoopers is overhauling its India operations, two months after starting an investigation into fraud at one of its clients here.
The auditor, which has nine offices and thousands of clients in India, said Thursday that it would make a number of sweeping changes to “re-emphasize quality.”
The new steps include adding a five-member advisory board in India, appointing a chief of risk management from outside India to oversee work in the country, adding an auditing team in India and replacing the management in its Hyderabad office.
Price Waterhouse, the Indian arm of PricewaterhouseCoop ers, audited Satyam Computer Services, a software and outsourcing firm whose chairman said in January that he had made up about $1 billion in cash and overstated operating margins. Two of Price Waterhouse’s partners are being held without bail in a Hyderabad jail, on charges of criminal conspiracy and cheating. Satyam has hired KPMG and Deloitte Touche Tohmatsu to restate its accounts.
PricewaterhouseCoop ers has said that there was no evidence that the two auditors were complicit in the fraud. Still, the changes announced Thursday might raise questions about whether quality issues were more widespread through the firm’s operations in India.
“While we are confident in the overall quality of our services and our people, the problems at Satyam have created a difficult environment, and therefore we are taking all the necessary steps to demonstrate to our clients and other stakeholders our commitment to the highest standards,” Ramesh Rajan, chairman of Price Waterhouse, said in a statement Thursday.
Price Waterhouse’s advisory board will be made up of four executives from outside the company and one PricewaterhouseCoop ers executive from outside India. A new head of “quality assurance and risk management”will also come from PricewaterhouseCoop ers operations outside India.
A partner from India, Sharmila Karve, was named the new head of auditing for the firm. She has appointed a team of seven to oversee audits in India. Karve takes over from Thomas Mathew, who resigned from his role as the “assurance leader” in January after the Satyam fraud.
The global firm “fully supports” the new steps taken in India, Samuel DiPiazza Jr., chief executive of PricewaterhouseCoop ers International, said in a statement. “It is essential that the quality, expertise and behavior of partners in PwC member firms all around the world are, and are clearly seen to be, of the highest standards,” he said.
The overhaul of India operations comes after about a dozen PricewaterhouseCoop ers examiners from outside the country inspected audits and practices at the firm in recent weeks. Price Waterhouse is the only foreign auditing firm allowed to sign off on the balance sheets of Indian companies, because its presence predates a law against foreign ownership.