NEW DELHI: Several PricewaterhouseCoopers India entities, including the group's audit firms, would have ended 2010-11 with losses had it not been for large amounts of "sundry income" received from undisclosed sources.
According to reports accessed by TOI, PwC India entities-audit firms Price Waterhouse (PW) and Lovelock & Lewes (LL) and consulting company PricewaterhouseCoopers Pvt Ltd (PwCPL ) - received "sundry income" of over Rs 200 crore in the previous fiscal, all of which has been unexplained in the accounts.
But for the money, each of these entities would have been in the red, presenting a grave risk to their ability to retain their highly-specialized workforce as well as their capacity to operate and service clients comfortably.
Consider the facts: PwCPL had sundry income of Rs 111.73 crore in 2010-11, an amount almost seven times as large as its reported profit-after tax (PAT) of Rs 16.19 crore, which incidentally was down by 51% from the previous year. PwCPL's revenue from operations was Rs 1,013.17 crore, up by a marginal 2.3%.
In audit firm PW, sundry income was Rs 68.51 crore, more than three times the PAT of Rs 22.47 crore and more than 40% of its fee income of Rs 167.88 crore. In LL, the other audit firm, the sundry income was Rs 28.99 crore, almost double the PAT of Rs 15.43 crore and about one-third of the reported fee income of Rs 86.80 crore.
Interestingly, while there is no mention of the source of the exceptionally high amounts of sundry income in the accounts of PwCPL and PW, the notes to the accounts in LL make a mention and list it as "income support from Pricewaterhouse Coopers Global Services", which suggests that the money came from overseas.
When contacted, a spokesperson for PW India firms declined to comment on the matter. "These are internal matters and as a policy, we do not comment publicly on them," the spokesperson said. Asked about the mention of Pricewaterhouse Coopers Global Services in the LL financial statement, the spokesperson responded, "We are unaware of the Pricewaterhouse Coopers Global Services entity that you refer to." What remained unexplained was why in that case the company's own audited accounts refer to such an entity.
Existing regulations do not permit foreigners to either practise auditing or even to fund audit firms in India. PW and LL are audit firms registered with the Institute of Chartered Accountants of India (ICAI) and are thus prohibited from accepting any foreign investment.
The spokesperson for PW India firms did not comment on the source of the funds or of their application, despite their large value. Also, there was no response to a question on whether the funds included any amounts received from any overseas member firm of the PricewaterhouseCoopers network or from any other overseas entity, for reasons other than for professional services rendered. "As informed earlier, as a policy we do not publicly comment on internal matters," the spokesperson said.
PwC India firms were the auditors of IT major Satyam, which was involved in one of the biggest corporate scams in India. Top auditors of PwC India entities were indicted and later jailed in relation to the scam, a development that could have created a stress on the business of PwC India entities. The global recession and slowdown in the Indian economy is also believed to have impacted the business of PwC India entities, creating a lot of pressure on their profitability.
PwC is one of the 'Big 4' global financial services company, providing a gamut of offerings like tax and regulatory services (TRS) and advisory services, apart from audit and assurance work. Any stress on the Indian entities, which pay a fee to use the PwC brand name, has the potential to impact the global business of the PwC network. This is because many multinational companies hire a single firm to conduct audit across their global subsidiaries.
If PwC India entities are under pressure or face closure due to financial stress, some of these MNC companies could well shift to other firms, including the others in the Big4 league, resulting in a major business loss to PwC.
(Source- http://economictimes.indiatimes.com)
According to reports accessed by TOI, PwC India entities-audit firms Price Waterhouse (PW) and Lovelock & Lewes (LL) and consulting company PricewaterhouseCoopers Pvt Ltd (PwCPL ) - received "sundry income" of over Rs 200 crore in the previous fiscal, all of which has been unexplained in the accounts.
But for the money, each of these entities would have been in the red, presenting a grave risk to their ability to retain their highly-specialized workforce as well as their capacity to operate and service clients comfortably.
Consider the facts: PwCPL had sundry income of Rs 111.73 crore in 2010-11, an amount almost seven times as large as its reported profit-after tax (PAT) of Rs 16.19 crore, which incidentally was down by 51% from the previous year. PwCPL's revenue from operations was Rs 1,013.17 crore, up by a marginal 2.3%.
In audit firm PW, sundry income was Rs 68.51 crore, more than three times the PAT of Rs 22.47 crore and more than 40% of its fee income of Rs 167.88 crore. In LL, the other audit firm, the sundry income was Rs 28.99 crore, almost double the PAT of Rs 15.43 crore and about one-third of the reported fee income of Rs 86.80 crore.
Interestingly, while there is no mention of the source of the exceptionally high amounts of sundry income in the accounts of PwCPL and PW, the notes to the accounts in LL make a mention and list it as "income support from Pricewaterhouse Coopers Global Services", which suggests that the money came from overseas.
When contacted, a spokesperson for PW India firms declined to comment on the matter. "These are internal matters and as a policy, we do not comment publicly on them," the spokesperson said. Asked about the mention of Pricewaterhouse Coopers Global Services in the LL financial statement, the spokesperson responded, "We are unaware of the Pricewaterhouse Coopers Global Services entity that you refer to." What remained unexplained was why in that case the company's own audited accounts refer to such an entity.
Existing regulations do not permit foreigners to either practise auditing or even to fund audit firms in India. PW and LL are audit firms registered with the Institute of Chartered Accountants of India (ICAI) and are thus prohibited from accepting any foreign investment.
The spokesperson for PW India firms did not comment on the source of the funds or of their application, despite their large value. Also, there was no response to a question on whether the funds included any amounts received from any overseas member firm of the PricewaterhouseCoopers network or from any other overseas entity, for reasons other than for professional services rendered. "As informed earlier, as a policy we do not publicly comment on internal matters," the spokesperson said.
PwC India firms were the auditors of IT major Satyam, which was involved in one of the biggest corporate scams in India. Top auditors of PwC India entities were indicted and later jailed in relation to the scam, a development that could have created a stress on the business of PwC India entities. The global recession and slowdown in the Indian economy is also believed to have impacted the business of PwC India entities, creating a lot of pressure on their profitability.
PwC is one of the 'Big 4' global financial services company, providing a gamut of offerings like tax and regulatory services (TRS) and advisory services, apart from audit and assurance work. Any stress on the Indian entities, which pay a fee to use the PwC brand name, has the potential to impact the global business of the PwC network. This is because many multinational companies hire a single firm to conduct audit across their global subsidiaries.
If PwC India entities are under pressure or face closure due to financial stress, some of these MNC companies could well shift to other firms, including the others in the Big4 league, resulting in a major business loss to PwC.
(Source- http://economictimes.indiatimes.com)
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