Satyam Computer Services, Ltd.–India’s Enron”
Please answer question 3
and answer the respond to the other person below
7) In your opinion, should PWI be subject to civil litigation? PwC?
Under the premise of Common Law and GAAS applied in the United States, I believe PWC should be held liable. PWC was the parent firm of PWI and the Saytam shares were publically traded domestically on the NYSE. The case states Saytam lost around $2 billion in market capitalization immediately following Raju’s disclosure of material misstatement to the Balance Sheet and Income Statement. Under Common Law, the auditor is liable to foreseeable parties (in this case investors) in the event said party suffered economic loss due to the reliance on a material misstatement in the Financial Statements and the auditors failed to show proper due care. PWI failed to identify the inflation of cash account balances by relying solely on the management of Saytam to provide confirmation of bank account balances. This demonstrates a lack of professional skepticism and proper due care as it relates to its interactions with the management at Saytam. Furthermore, the failure to properly plan the audit and identify areas of potential misstatement further contributed to the material misstatement of cash account balances. Assuming strong convergence of international standards as it relates to audit standards, I believe PWI should be held liable in India.