Headline from the Financial Times.
"The biggest ever trial of an audit firm has a lot of lurid elements: a $2.9bn fraud, carried out over years, in which cash was looted to pay for a corporate jet, a seaplane and a vintage car collection. But the jury is basically being asked to answer a simple question: did PwC do all that it could to stop it? "
http://on.ft.com/2bw1TRh
What's your opinion?
Wayne, FYI, the link you posted requires a subscription to review the article.
Regarding your question, (and without being able to read the article), it would seem to me that shareholders pay enough money to auditors that the
Wayne, you want opinions, you need to have the article accessible for full content. Your shortened version, indicates on the surface that PwC should indeed have some responsibility, that is what
There is a free registration, and then you get to view some articles for free before the paywall comes down.
http://www.ft.com/cms/s/0/a351836c-63bb-11e6-8310-ecf0bddad227.html#axzz4HP3KJpv0
http://www.ft.com/cms/s/0/45972b24-60d1-11e6-ae3f-77baadeb1c93.html
More:
http://www.marketwatch.com/story/pwc-faces-three-major-trials-that-could-put-firm-out-of-business-2016-08-12
http://goingconcern.com/topic/open-items/pwc-facing-existential-threat
My apologies, but I don't have a subscription to FT and was able to read the article.
If this is concerning the mortgage bank/firm in Florida (?), It is a conglomeration of FUBAR (is that acronym allowed in here?) affecting a lot of entities to include PWC, Freddie Mac, Ginnie Mae and don't forget the regulatory auditors. It is an extensively complex process to originate fraudulent loans and then selling them, affecting almost ALL facets of the bank. I would say that if PWC was not able to uncover it with one audit facet/process, then they COULD HAVE uncovered it with others. Not to mention that this included multi year audits. Says something about just following last year's audit process.
I will say this, if there was auditor rotation, the percentage of uncovering the fraud would have shot up dramatically. Then again, the decision to do auditor rotation lies with the offending entitiy.
From an external stand point.....It could have been stopped/uncovered if only Freddie Mac raised the red flag when they stopped buying the mortgages. Instead, they kept it to themselves. Or GInnie Mae could have asked Freddie Mac for their experience with the firm before buying the mortgages.
Note: As an auditee (Bank), I symphatize about explaining everything to a new audit firm (and regulatory teams) or even to a new team member (same firm) year in and year out. But I realized that that can be a good thing and part of the job.
