Satyam’s Audit Unreliable, Say Price Waterhouse...

PricewaterhouseCoopers LLP’s Indian unit said the audit reports of Satyam Computer Services Ltd. can no longer be relied on, after the software exporter’s founder admitted $1 billion of false accounting.

Chairman Ramalinga Raju’s Jan. 7 admission that Satyam’s finances had been inaccurate for “several years” rendered the audits invalid, Price Waterhouse said in a letter to directors sent to the Bombay Stock Exchange today. The auditor relied on financial statements from Satyam to prepare the report, it said.

Satyam’s government-appointed board named KPMG and Deloitte Touche Tohmatsu today to restate India’s fourth-largest software exporter’s accounts. The auditors need to quickly assess the state of Satyam’s finances to clear the way for a bailout to save the Hyderabad-based company’s 53,000 jobs.

“For any financial institution to extend loans to Satyam to solve its liquidity problems, the bank has to at least know what it’s getting into,” said Apurva Shah, head of research at Mumbai-based brokerage Prabhudas Lilladher Pvt. “Any solution has to start with knowing the extent of the problem, at Satyam practically everything is doubtful.”

Ex-Chairman Raju said on Jan. 7 that he’d fabricated $1 billion of cash and assets, sparking an 83 percent plunge in Satyam’s stock that wiped out $2.2 billion of investor wealth. The government said on Jan. 12 it may provide funds to bail out Satyam, after new director Deepak Parekh said its working capital requires “immediate attention.” Satyam would have to restate earnings for several years, he said.

Satyam declined 4.8 percent to 29.55 rupees at 1:50 p.m. in Mumbai today.