Pankaj Doval TNN
New Delhi: Auditing and accounting regulator, the Institute of Chartered Accountants of India (ICAI), has asked the Reserve Bank to examine if there was a violation of the Foreign Exchange Management Act (Fema) by PricewaterhouseCoopers India entities over inflow of foreign funds from Pricewaterhouse-Coopers Services BV, Netherlands.The institute has also asked market regulator Sebi to look into the matter.
ICAI president Jaydeep Shah told TOI that RBI and Sebi have been approached as some of the issues fell in their domain. We have written a letter to RBI on the matter and sought a clarification on whether there were Fema violations in the transfer of funds into the Indian entities and also whether PwC India firms were entitled to get the funds, he said. ICAI has also asked RBI whether it has initiated any steps. We want to know whether they have done anything on the fund inflow and, more importantly, whether any prior approval was taken by PwC India.
Shah said Sebi too has been sounded off on the matter. We have asked Sebi to see if in any way this particular matter is connected with any entity on which it has jurisdiction. He, however, did not disclose whether any of the two regulators had got back to the ICAI on its queries.
When contacted, a spokesperson for PwC India entities said, PwC India entities have not received any query from RBI on this matter. The grants from PwC Network to PwC India entities are not an investment. These are received in order to assist in maintaining the standards required of all member entities of PwC Network in India and were received at our request as outright non-refundable grants facilitating enhancement of the resources and skills. The grants have come through regular banking channels. These are current account transactions which are under the automatic route.
TOI had earlier reported on fund inflow into several PwC India entities, including tax and business advisory services company PricewaterhouseCoopers Pvt Ltd (PwCPL) as well as audit firms such as Price Waterhouse (PW) and Lovelock & Lewes (LL), from PricewaterhouseCoopers Services BV, Netherlands. The inflow was mentioned as income support in the notes to the accounts of Lovelock & Lewes.
Without the funds from the overseas entity, which was mentioned under the sundry income head, the Indian entities would have ended up posting losses. Existing regulations do not permit foreigners to either practice auditing or even to fund audit firms in India. PW and LL are audit firms registered with ICAI.
- The case pertains to fund inflows into several PwC India entities under the sundry income head
- PwC India says the grants from PwC Network are not an investment