Just wanted to get some insight as to whether or not you guys think this could spell the end for the Big 4 Giant. As well, whether or not PwC will be able to bare a settlement of this magnitude? (assuming it's larger than those of Deloitte, EY, and KPMG) Given the damages that are currently being sought.
Source: Marketwatch
PwC will take it to court. The litigation is ridiculous, but PwC is taking a huge risk by letting it go to a jury. There's just so much anti-business sentiment out there that the merits of the charge (or lack-their-of) isn't particularly relevant.
The auditors get sued every time a company goes bankrupt. The amount sought is massive but PwC will fight it extremely aggressively and wont have to pay out anything close.
“As the professional audit standards make clear, even a properly designed and executed audit may not detect fraud, especially in instances when there is collusion, fabrication of documents, and the override of controls, as there was at Colonial Bank. We are confident that a jury will understand the applicable rules and standards in this case and decide accordingly,” she told the FT.
I would hate to base a huge settlement on 12 Joe Blows understanding how a multinational corporation is able to fail to catch fraud and collect millions in fees in our environment today. I think they are rolling the dice with a bit too much faith in people understanding (or caring) about professional audit standards
The point is that PwC wasn't the auditor of the fraudulent party. Deloitte was. PwC audited the defrauded company. In other words, the fraudulent company is suing the auditor of the defrauded company for not identifying its fraudulent activities.
The whole thing is asinine.
http://www.marketwatch.com/story/pwc-faces-three-major-trials-that-coul…
Interesting article here. Lots of comparisons to Arthur Andersen, Lehman, and Bear Stearns
That's the article I was referring to. Thanks for posting.
This is the quote that sums up my current impression of the situation. I'm not familiar with the matter, so I can only speculate. But if this is true, it's hard to imagine why PwC would have to pay anything.
“Beyond the $5.5 billion sought, the case is unusual because the plaintiff is the trustee of the entity that committed the fraud and is suing not its own audit firm but the audit firm of the institution it defrauded,” he said.
They almost always settle out of court. This type of litigation is not uncommon. Auditors are not liable for fraud unless negligible.
Well I think that's where the whole they had an intern staffed on these deals doing enormous amounts of the work being overseen by someone who didn't feel comfortable even handling the work. Guess we'll see.
Sounds like just another day at the office for Big 4.
Either way, not going to put them out of business.
PwC consulting became its own legal entity last year (PwC Advisory Services LLC) does that make them immune to this even if shit does hit the fan? (Doubt it will)
It probably would make it immune if none of the PwC Advisory Services LLC staff performed the work. This is why LLPs/CS exist in the first place, to shelter assets. The U.S. audit firm is a separate LLC, so it is likely that only the assets of the LLC which performed the services (the audit firm) would likely be at risk.
Well... the payout would come from ALL of the Partners across LoS'. Although PwC Advisory is a separate legal entity under PwC US, all of the Partners roll up under PwC US. A settlement against PwC Assurance, effectively is paid by all LoS.
And regardless, all these firms accrue huge reserves over the year to cover these exact scenarios. This will not be the 'end of days for PwC'
If this happens, PwC's Canadian member firm will just re-brand to something like "Accounting&" or "Tuesday"
Up to date opinions/input on current state & future outlook for Pwc (Originally Posted: 05/06/2012)
Hey,
I'll be interning at PwC this summer before I start my 1 year MIS degree in fall. I've been doing a lot of research comparing the Big 4 and MBB and there are a lot of outdated opinions.
So as most of you know PwC acquired Diamond and PRTM within the last few years. From what I know Diamond was doing big things and PwC's move to acquire them is turning out to be an excellent move.
I'm getting into Healthcare IT and the more people I talk to the more I am realizing that all of these HIPPA regulations are going to significantly drive this sector. Hospitals, Big Pharma etc. need compliant IT systems that not only follow the regulations of HIPPA, but also fuel the efficient sharing of information between said companies.
Basically I'd like to get your (more experienced professionals) opinions on where you think PwC is going and if you think it is a smart move to get into Healthcare IT right now and try to "ride the wave" of work that is coming in over the next few years. I'm very interested in IT Strategy instead of implementation (Accenture) so I've been drawn to PwC (Diamond initially), Deloitte, or MBB (which I have far less of a chance getting into in contrast with the Big 4). I'll be interning this summer at PwC nonetheless but I would like to get the opinions of professionals who are not a part of PwC (unbiased opinion).
Thanks for any input I just want to learn more about the consulting landscape,
Hoosier82
Would like to know as well
Looks like they decided to settle - http://www.ft.com/fastft/2016/08/26/pwc-settles-landmark-suit-over-culp…
Thanks for the update, appreciate it.
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