PricewaterhouseCoopers auditor under fire

PwC has been embroiled in a scandal since February, when the Council of Tax Practitioners of Australia banned Peter John Collins, former head of international taxation at PwC Australia, for sharing information with other audit officials from secret meetings with the Treasury about new laws designed to control Tax evasion.

According to the Financial Times, in May, the advisory firm’s leader resigned from his executive position three days after he admitted receiving emails containing classified information from the government about changes to tax avoidance laws, after he used them to advise clients to circumvent them. .

According to the same publication, this tax information leak has caused several important clients in the country to re-evaluate their relationships with the advisor.

Emails released in the Senate show PricewaterhouseCoopers misused confidential information provided by Collins, which signed non-disclosure agreements, to advise its clients and win new business.
The effects were not long in coming and the leak of tax information from PwC in Australia caused many of the country’s high profile clients to reassess their relationships with the consultancy. One of these is the AustralianSuper Pension Fund, which has three million members. According to the Financial Times, the fund announced that it would re-evaluate the contract with the auditor this year after the scandal. The Australian government also reported PricewaterhouseCoopers to the authorities, suspended any ties between the state entities and the consultant, and requested an international investigation into the matter.

Reuters revealed that Australian Senator Richard Colbeck admitted that the information revealed so far showed that the scandal had “spread internationally” and revealed that other countries should launch their own investigations.

After the scandal broke in May, the consultant had already suspended nine of the company’s management personnel.
The appeal takes on even bigger features when PWC audits Portugal’s four largest private banks: Santander, BCP, BPI and Novobanco. Nascer do SOL contacted him about the matter, and neither the Ministry of Finance nor the Bank of Portugal provided any clarification regarding the controversy. The Portuguese Association of Banks also declined to comment, saying it had nothing to do with the sector in Portugal.

Review inconsistency

These differences are not new. Already in 2018, the Securities and Exchange Commission of India (SEBI, its English abbreviation) has tightened its grip on PricewaterhouseCoopers (PwC) for failing to discover a fraud scheme around an Indian software giant. As a result, in addition to not being able to audit the accounts of listed companies in that country for two years, board members have been the target of criminal proceedings.

The case occurred in 2009 and involved India’s fourth largest software company. The head of giant Satyam Computer Services, Ramalinga Raju, has spent years faking company accounts. A case of accounting fraud of $2,250 million (about 2 billion euros), which escaped the ‘monitoring’ of PricewaterhouseCoopers, which did not discover the scheme.

According to Raju, 94% of the money in the company’s accounts is invented.
The case shocked the market, as Satyam was seen as one of the most important technology companies in the country and its president and founder as a great entrepreneur.

Last year, KPMG in the UK was sanctioned, by Britain’s Financial Reporting Council (FRC), with a £4.5m (about €5.3m) fine for failures in an audit of the Rolls-Royce Group in 2010.

At issue was an investigation launched by the Council on Foreign Relations in 2017 into KPMG’s conduct in auditing the Rolls-Royce Group between 2010 and 2013. The audit failures relate only to fiscal year 2010, when Rolls-Royce made payments to intermediaries in India, which resulted in This led to the British manufacturer being charged with bribery and corruption by the Serious Fraud Office, culminating in heavy fines.

This month, KPMG stopped providing auditing services to Herbalife and Skechers in the wake of a scandal involving one of its auditors, who admitted to disclosing privileged information in exchange for money and offers.

According to the Wall Street Journal, former KPMG auditor Scott London — responsible for the accounts for Herbalife and Skechers — was fired and later admitted he “regretted revealing confidential data to third parties.” He said the information leaks “began a few years ago”, but that KPMG “was not responsible” for its actions.

According to the same newspaper, neither KPGM nor Scott London revealed who received the confidential information from the auditor, but a source close to the process revealed that it is not a professional fund or investor and that the investigations come after widespread criticism by regulators and investors regarding the auditor’s inability to Discover the problems in banks and major financial companies in the years leading up to the financial crisis.

After waiving the Herbalife and Skechers accounts, KPMG said it was no longer responsible for the financial results provided by the nutrition company in the past three years and in the past two years by the shoe manufacturer.