Finance and Business

PWC audit of 'India's Enron' faces probe

2009-07-06T05:17:00.000-07:00

Accountancy giant PricewaterhouseCoopers is facing deepening scrutiny over its audit of Satyam - the IT giant known as "India's Enron" - whose founder admitted fabricating cash and other non-existent assets of more than £1bn.

The audit of Satyam was not, as previously thought, carried out by PWC's main operation in India but by a small subsidiary called Lovelock & Lewes, according to the Central Bureau of Investigation, which looks into serious and complex Indian fraud cases.

The subsidiary was part of the old Coopers & Lybrand network swallowed up by PWC. Its role may have contributed to confusion over whether PWC was responsible for signing off the accounts.

The accountant's London office said it deployed Lovelock & Lewes because, under a quirk of Indian law, audit firms cannot employ more than 20 people and are not allowed to use their international brand name for audits.

PWC argues that its Indian arm is a separate legal entity from the global operation. Therefore, it says, the main firm would not be liable for any damages linked to the Satyam collapse. Nevertheless, sources in London concede that the global firm could be embroiled in future class actions by investors.

In a further twist, it has emerged that PWC and Satyam had business links as well as an audit relationship in the United States. Both worked on a major IT contract for Idearc, a spinoff of telecom firm Verizon, in the US. Satyam shares are quoted on Wall Street, where under securities and exchange commission rules, auditors should not have business relations with their clients.

PWC says this was the only contract on which they both worked and that they were hired independently by the client, Idearc.

Shares in Satyam plummeted when its founder B Ramalinga Raju admitted fabricating revenues last December. The auditors, S Gopalakrishnan and Srinivas Talluri have been suspended and arrested.

The Satyam affair compounds the woes of PWC, which was also involved in audit work at collapsed companies AIG and Northern Rock. Last week an angry AIG shareholder questioned the level of fees paid to PWC. In the past two years it received $250m for auditing the insurance giant, which had to be bailed out by the US government to the tune of $182.5bn.

PWC, which had audited the insurer for many years, was last year fined $97m after AIG produced incorrect accounts and had to make a near $4bn restatement of earnings. Edward Liddy, AIG's chief executive, defended the accountant, saying it had raised early concerns about controls at the division blamed for bringing it to the brink of ruin.

Last year a committee of MPs raised concerns over a possible conflict of interest for PWC in its role as auditor of Northern Rock. PWC acted as adviser on its securitisations and gave the bank a clean bill of health to its shareholders.

Accountants believe that US investors will take action against audit firms for their role in the collapse of financial giants. In the US, KPMG is being sued for $1bn (£690m) in damages by the trustee of a collapsed US sub-prime lender, New Century Financial.

KPMG is accused of conducting "reckless and grossly negligent audits" that failed to show the lender's financial problems. The auditing firm has denied any wrongdoing.

The lawsuits cite emails which allegedly show KPMG specialists had tried to point out errors in the company's financial statements but were silenced by the KPMG partner in charge of the audits.

Courtesy:http://www.guardian.co.uk/business/2009/jul/05/pwc-audit-satyam-assets

India targets return to 9.0 percent growth

2009-07-06T03:11:00.000-07:00

NEW DELHI (AFP) – India's finance minister targeted a return to 9.0 percent economic growth "at the earliest" in a budget speech Monday that suggested the country had seen off the worst of the global financial crisis.

But in announcing increased funding for farmers and poverty alleviation programmes, Pranab Mukherjee also warned that India's soaring fiscal deficit would continue to grow in 2009-10 to 6.8 percent of GDP.

The estimate was far higher than the 5.5 percent put forward by the government in an interim, pre-election budget in February.

The deficit had ballooned to 6.2 percent in the year to March 2009 -- more than double the government's target of 2.5 percent and the highest in nearly two decades.

"The first challenge is to lead the economy back to the high growth rate of 9.0 percent per annum at the earliest," Mukherjee told parliament as he presented the 2009-10 budget.

"The second challenge is to deepen and broaden the agenda for inclusive development," he said.

India's economy grew by 6.7 percent in the year ended March 31 -- the slowest rate since 2003 and down from nine percent a year earlier, as the effects of the global economic downturn hit home.

In its annual Economic Survey presented to parliament last week, the finance ministry had predicted that GDP growth could exceed 7.0 percent this year.

But it stressed that the figure was dependent on a recovery in the global economy as a whole, and that of the United States in particular.

Mukherjee warned that the push for a return to higher growth would have to be balanced against the need for "financial austerity."

Analysing the impact of the global economic crisis on India, he said he believed the "the two worst quarters are behind us".

"But we cannot afford to drop our guard," he added.

It was the Congress-led government's first budget since its unexpectedly decisive victory in April-May elections, and had been keenly anticipated, with the ruling coalition no longer burdened by the need to cater to its erstwhile Communist partners.

The initial stock market reaction however was extremely negative, with the benchmark 30-share Sensex falling 659.55 points or 4.42 percent to 14,253.3 in intra-day trading.

Analysts said Mukherjee's speech, which promised increased spending for farmers and the poor, had failed to provide a clear reform path for boosting growth and reducing the deficit.

"There is nothing in the budget which is specific to help boost growth. It is a complete disappointment," said Apurva Shah, head of research with brokerage Prabhudas Lilladher.

After Mukherjee's speech, Prime Minister Manmohan Singh acknowledged that it was a "primarily rural development-oriented budget."

Courtesy:http://news.yahoo.com/s/afp/20090706/wl_sthasia_afp/indiaeconomybudget;_ylt=ApauEjsqwAX97fCbJYTvuGQBxg8F;_ylu=X3oDMTJxNzV2azJzBGFzc2V0A2FmcC8yMDA5MDcwNi9pbmRpYWVjb25vbXlidWRnZXQEcG9zAzEwBHNlYwN5bl9wYWdpbmF0ZV9zdW1tYXJ5X2xpc3QEc2xrA2luZGlhdGFyZ2V0cw--

Market cuts losses; Sensex down 500 points

2009-07-06T02:18:00.001-07:00

MUMBAI: Equity benchmarks were off lows but still under tremendous pressure as the union budget for 2009-10 disappointed on many fronts. While Finance Minister Pranab Mukherjee withdrew fringe benefit tax (FBT) and commodities transaction tax (CTT) to be abolished, he kept the corporate tax unchanged and increased the minimum alternate tax to 15% from 10% of book profit.

At 1:20 pm, Bombay Stock Exchange’s Sensex was at 14260.25, down 652.80 points. The index touched an intra-day low of 14147.80 and high of 15097.87. National Stock Exchange’s Nifty was at 4235.30, down 188.95 points or 4.27 per cent. The broader index touched an intra-day low of 4195.40 and high of 4479.80.

Reliance Infrastructure (-8.60%), Reliance Capital (-7.92%), ICICI Bank (-7.82%), HDFC (-7.41%) and Reliance Communications (-6.89%) were amongst the Nifty losers. ITC (3.83%), Cairn India (2.29%) and Ranbaxy (0.14%) were amongst the Nifty gainers.

Market breadth was negative on the Nifty with 47 declines and 3 advances.

Courtesy:http://economictimes.indiatimes.com/Market-cuts-losses-Sensex-down-500-points/articleshow/4744111.cms

Highlights of Indian Budget 2009

2009-07-06T02:10:00.001-07:00

* Political funding to get 100% tax deduction
* Tax holiday for exporters extended to 2011
* Personal tax exemptions up to 1.6 lakh
* National Pension Scheme exempted from STT
* MAT tax credit extended from 7 to 10 years
* Minimum alternate tax increased to 15% of book profits
* Commodity Transaction Tax abolished
* 10% surcharge on personal tax removed
* Fringe benefit tax scrapped
* IT exemption for women up by Rs.10,000
* IT exemption for senior citizens up by Rs.15,000
* No change in corporate tax
* New Direct Tax Code in 45 days
* Share of direct taxes increased to 56%
* To introduce GST by April 1, 2010
* GST will be dual in nature
* GST will be dual in nature
* Centralised tax processing centre at Bangalore
* Tax distortions to be eliminated
* Plan expenditure raised by 34%
* Govt to spend Rs. 1.42lakh cr for Defence
* Total expenditure crosses Rs. 10 lakh cr
* Rs. 120cr allocated for unique id projects
* 46 lakh BPL families under rural insurance plan
* Rs.50cr allocation for Punjab University
* Hike in allocation for minority ministry
* Interest subsidy for home loans upto Rs. 1 lakh
* Rs. 2113 cr for IITs, NITs
* One central university in each uncovered state
* More IITs on cards
* Hike in allocation for Commonwealth Games
* Pension of non-commissioned officers hiked
* One rank one pension for ex-servicemen
* Sensex nosedives 220 points
* Biometric smart cards in 12 to 18 months
* Employment exchanges to be modernised
* Female literacy to be doubled in three years
* Rs. 350cr allocation for BPL families
* National literacy mission for women to be launched
* Full interest subsidy for education loans
* Govt to move food security bill soon
* Indira Awaaz Yojana outlay raised by 63%
* Food security to provide rice and wheat at Rs. 3 per Kg for poor
* Banks , Insurance companies outside divestment plan
* NREGA allocation up at Rs. 39, 100cr in 09
* PSUs to remain under Govt control
* To hike public ownership of all listed companies
* One banking centre in every block in next three years
* Fertiliser subsidy to reach farmers directly
* Stimulus package to print media extended to Dec 31
* Expert committee on petroleum products to be set up
* More funds SIDBI for SMEs
* Work on Saral II form to be taken
* Farmer loan waiver period extended by 6 months
* Allocation for schemes for the urban poor to be raised to Rs.39,730 crore in 2009-10
* Local production of natural gas to double
* Interest subvention to exporters extended to March 2010
* 75% hike for accelerated irrigation
* Agricultural credit target: Rs. 3.25 lakh cr
* Allocation to Railways up from Rs. 10,800 cr to Rs. 15,800cr
* Additional Budget allocation to farmers
* Hike in allocation for Mumbai flood management
* Blueprint for national gas grid
* Housing allocation hiked under Rajiv Awaaz Yojana
* 87% hike to urban renewal mission
* NHAI allocation up by 23%
* Government successful in attracting private investment
* IIFCL to be given greater flexibility.
* Increase investments in infrastructure to 9% of GDP by 2010
* Signs of revival in domestic industry
* Achieved growth of 6.7%
* Move towards energy security via Integrated Energy Act
* Foreign capital inflow must increase
* Focus to sustain momentum in exports
* Lead economy to 9%

Courtesy:http://sify.com/finance/prebudget/

Indian Budget 2009

2009-07-06T01:06:00.000-07:00

Lets start with Indian Budget 2009.

Here are some quick key notes

Courtesy:http://sify.com/finance/prebudget/