PW asked to explain relationship with its parent firm

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New Delhi: The ministry of corporate affairs has asked auditing firm Price Waterhouse, the Indian arm of the global auditing firm PricewaterhouseCoopers (PwC) to explain its internal structure and working relationship with the parent firm. The development comes after the Securities and Exchange Board of India (Sebi), which is probing the Satyam accounting fraud, has reportedly suggested in its interim report that PW be prohibited from auditing any listed firm for a certain period of time.

Corporate affairs minister Salman Khurshid told FE, “We have asked Price Waterhouse India to explain the structure of their firm and formal relationship with their parent company PricewaterhouseCoopers. It is important to know the internal structure and the working style of Price Waterhouse at various centres in Hyderabad, Bangalore and Gurgaon. There have been many apprehensions about the working of Price Waterhouse in the past and we would want to know the performance of the partners and how do they report about the companies for whom they are working”.

When asked whether the ministry would initiate any action against PW, Khurshid said, “We can only decide our future course of action on Price Waterhouse once we are through with the report of the accounting regulator, the Institute of Chartered Accountants of India (ICAI), which will submit its report on Satyam probe on July 9”.

This is not the first time when the regulators are contemplating banning Price Waterhouse. The Reserve Bank of India (RBI) in 2004 had issued advisory to banks not to engage Price Waterhouse after detecting the accounting deficiencies of Global Trust Bank (GTB) where PW had performed the auditing. The ban was lifted after a period of three years.