Recently, the Department of Justice narced out PwC to the AICPA’s Professional Ethics Division for acts discreditable to the profession.1
The DOJ claims that PwC did not follow the standards and provisions required for federal audits during its 2011 audit of Big Brothers Big Sisters of America (BBBSA), and not following audit standards constitutes an act discreditable to the profession. Oddly, being naked in public with “I’m a licensed CPA” written in lipstick on the small of your back while making your Ace Ventura-style ass puppet say, “I comply with GAAS,” is not an act discreditable to the profession.
Why was the DOJ reviewing PwC’s audit? Because the DOJ had given Big Brothers Big Sisters $23 million in grants and wanted to make sure that their money had prevented $23 million worth of crime from happening.2
The DOJ claims that, among other things, PwC’s audit did not comply with GAGAS (generally accepted government auditing standards). It’s comforting to know that every time the accounting media mentions GAGAS, Stefani Joanne Angelina Germanotta gets pinged by Google Alerts.
The [DOJ] audit found that BBBSA was in material non-compliance with the majority of grant requirements that the [DOJ] tested. […] PwC stated that BBBSA complied in all material respects with the laws, regulations, and grants requirements
Apparently there were no younger brothers or younger sisters on the audit team, because they’d have known from childhood experience that Big Brothers Big Sisters are almost always full of shit.
The DOJ report goes on to say,
PwC’s working papers indicated that BBBSA did not have a formal timecard or time monitoring system to track employee time. […] However, the audit documentation concluded, without explanation, that payroll costs incurred and billed to the grant were considered fully supported.
They didn’t need any explanation because PwC personnel, like all accountants who fill out timesheets, know that in timesheets are so packed with bullshit that the absence of timesheets supports payroll costs as much as a complete set of timesheets.3
Here’s another gem:
PwC’s audit documentation […] references the Department of Health and Human Services (HHS). Because BBBSA did not expend HHS funding and PwC was not auditing HHS funding, this appeared to be an indication that language was copied from somewhere else and pasted to the file.
Why the fuck do we have the 150-hour rule when Big 4 CPAs make mistakes like a college freshmen trying to turn the Wikipedia page for Hamlet into a Comp Lit midterm?
Reuters summed it up by saying, “The report is a black eye for the U.S. arm of PwC,” a remarkable statement in that it is both (A) anatomically impossible and (B) completely true.
1 You’re right. It wasn’t the Department of Justice. It was the Office of the Inspector General of the Department of Justice. Good catch. You’re an amazing auditor.
2 Regular crime, not white-collar crime.
3 All hail Ron Baker.