Though Price Waterhouse has said the Securities and Exchange Board of India (SEBI) has taken an inordinately long time to hand out its order in the Satyam case, commentators have placed some of the delay due to the firm’s challenge of the regulator’s ambit in the Supreme Court.

It was just a year ago that a three-judge bench of the Supreme Court ordered SEBI to conclude the case against Price Waterhouse within six months. SEBI has completed its task within a year. The case datelines highlight the rocky road the Big Four audit firms including the Price Waterhouse network but also those of Deloitte, Ernst & Young and KPMG have faced since the Satyam saga of 2009 in India. Price Waterhouse is part of the network of tax and consultancy firms that make up PricewaterhouseCoopers (PwC).

In the interregnum, one of its rivals, Deloitte, has had to withdraw its audit report of National Spot Exchange Limited though commentators have questioned why it was not able to figure out the payments crisis before it blew out. There were also allegations of window dressing of accounts for kids wear company, Lilliput, by another rival, Ernst & Young that the ministry of corporate affairs decided to look into. And Serious Fraud Investigation Office of the same ministry chargesheeted one of KPMG’s audit arm, involving Reebok India. In all cases, the charges are broadly similar; to falsify the accounts and financial statements of the company.

As a result of these travails, in financial year FY18 almost half of India’s top listed companies to feature in the BSE 500 list had to change their auditors. The changes are mandated by Companies Act of 2013, a stiff response to the weak regulatory environment that prevailed under the older Companies Act of 1956. The permissive environment took down not only Satyam chief SB Ramalinga Raju but also its Bengaluru based auditor, one of the networks of 11 Price Waterhouse partnerships in India. As learning from the scandal, the new Act mandated that firms have to rotate their auditors after two terms of five years each.

After Wednesday’s SEBI order all those firms, which either retained or signed on Price Waterhouse in the rotation, may now have to hunt for fresh auditors soon. But again they will mostly search among the Big Four. An Economic Times report noted that these firms audit at least half of the companies in the BSE 500 list. Of them Price Waterhouse audits 43 while Deloitte leads the list at 89. A source in PwC said they were being penalised without recognising the sharp improvements they have made in the nine years since Satyam including diligent oversight mandated by the global audit oversight body Public Company Accounting Oversight Board. “The Securities and Exchange Commission of USA took note of the improvement in capabilities that has been made. We find no reference to those in the SEBI order”.

Yet there is a lingering disquiet over the quality of audit by these global top firms. Former chief justice of Delhi High Court, A P Shah wrote a letter to the Ministry of Finance raising allegations of some “highly disconcerting” issues involving PwC which he alleged posed threats to national security, safety of investments of common man and result in losses to the public exchequer. He referred to the group being auditors of not just Satyam but also of failed Global Trust Bank and of United Spirits which was led by Vijay Mallya till last year, again accused of siphoning of funds. PwC has denied the accusations. There are now fresh concerns that because of stiff bidding at low prices by the rivals, there could be "auditor buy out" by firms being audited, said an independent source.

Possibly because of these reasons, speaking at the annual event of the Institute of Chartered Accountants of India late last year, Prime Minister Narendra Modi suggested that it was time the Indian audit landscape dominated by these firms should change, and some Indian firms should rival them.

“People talk of the Big Four accounting firms. Sadly, there is no Indian firm there. By 2022, let us have a Big Eight, of which four firms are Indian”, he said.

This piece was first published on Business Standard.