India's market regulator, the Securities and Exchange Board of India, has banned PriceWaterhouseCoopers' affiliates from auditing any listed companies in India for two years.
The punishment is for PwC's failure to find out that outsourcing company Satyam Computer Services was indulging in a billion-dollar fraud which came to light in 2009.
The Wall Street Journal reported that PwC was in charge of auditing Satyam's accounts at the time its founder, B. Ramalinga Raju, admitted that he had boosted revenue by forging bank documents and inflating sales figures.
Raju and his brother, Rama Raju, were jailed for seven years in 2015. The company was bought by Tech Mahindra, another outsourcing company.
{loadposition sam08}Two PwC staff, S. Gopalakrishnan and Srinivas Talluri, also earned similar prison terms in 2015. They, and the company, were ordered to pay 131 million rupees (US$2 million) along with interest for what SEBI said were wrongful gains from the auditing of Satyam.
In a 108-page statement, SEBI said that the manner in which various entities bearing the PwC name had been registered in India in a "nebulous way", made it difficult not to take notice of the "loss of faith of the investors in the brand name".
It said the insulating the securities market from such fraudulent accounting practices by an international firm would be of no use unless the brand name PwC was not covered by the order.
The network structure of operations adopted by PwC should not be used as a shield to avoid legal implications arising out of the certifications issued under the network's brand name, the order said.
In a statement, PwC said it was confident that it would be able to get the order reversed in court.
“As we have said since 2009, there has been no intentional wrong doing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary.
"We believe that the order is also not in line with the directions of the Bombay High Court order of 2011 and so we are confident of getting a stay before this order becomes effective."