Vadlamani Srinivas, Satyam’s former CFO, has now reportedly stated that he had been left out of conversations between the company and its auditor, PwC regarding nearly $1 billion in fixed deposits on Satyam’s books, which turned out not to exist. The statement was leaked to the press and reported yesterday by the Times Online. Srinivas said that PwC and B. Ramalinga Raju, Satyam’s chairman, had communicated directly about the fictitious cash, which would have been highly unusual.
The Institute of Chartered Accountants of India has issued a notice to PwC’s local auditing unit, Price Waterhouse, demanding that it explain Satyam’s accounts within 21 days. A key question that the IACI seeks answers to is how and whether PwC failed to check on about $1 billion of Satyam’s accounts on deposit that Raju confessed were entirely “fictitious.”
In addition, the Times Online reports that PwC may face criminal action for allowing the fraud at Satyam. The firm has been named in the First Information Report filed by the Indian police, which marks the first step in a criminal investigation.
