Prove auditor's independence, SEC asks Wipro

BANGALORE, INDIA: U.S. Securities and Exchange Commission has asked Wipro Technologies to prove independence of its auditor KPMG India. Though there is no final date to present the report, the request issues that inability to do so may lead to appointment of a new auditor or get its business books audited again.

Around April 20, 2011, Wipro mentioned in its SEC filing that it has received a voluntary document request from SEC's Division of Enforcement.

The SEC filing said, “The document request includes, among other things, issues relating to auditor independence. If the Securities and Exchange Commission were to disagree with the conclusion of KPMG India and our Audit Committee that KPMG India is independent for purposes of its audit of Wipro, certain of our financial statements might have to be re-audited by a new independent registered public accounting firm.”

The month-old filing mentioned that KPMG India voluntarily reported the results of its investigation, to the SEC and it received a voluntary document request from the SEC’s Division of Enforcement.

Retain new auditors: SEC

It added that a conclusion by the SEC that differs with the conclusions reached by KPMG India and their Audit Committee could have a material adverse effect on them and could, among other things, require them to retain new auditors and have their financial statements for one or more years re-audited.

The issue came into light around March 1, 2010, when Wipro found the case of embezzlement by one of its junior level employees during the period from November 2006 to December 2009. In response to this, KPMG was brought in to act to investigate on the issue.

The SEC filing reiterated, “During the course of our investigation of this matter, our Audit Committee learned that this employee had engaged in a number of personal financial transactions, of relatively small value, with a junior member of KPMG India’s audit team assigned to the Wipro audit engagement.”

It further added that KPMG India informed them that this audit engagement team member initially served in low level positions during the period from September 2006 through December 2009, was promoted to assistant manager in October 2007 and further promoted to audit manager in October 2009, and remained in that position until he was removed from the audit team in December 2009.