When accounting goes unaccounted for
Looking to buy PwC Global Chairman Bob Moritz a gift for the holidays? We have two ideas for you from eBay:
Here’s what the stamps look like:
Both the signed Bebe photo and the PwC book of stamps can be yours for $60 each.
Related article:
#TBT: That Time When PwC Global Chairman Bob Moritz Took a Pic with Bebe Rexha
Reuters reports:
The 9th U.S. Circuit Court of Appeals reversed [a lower court decision] on Wednesday, ruling that PwC is entitled to litigate whether the unlicensed accountants can be exempted from overtime laws. The 9th Circuit remanded the case back to a district court in Sacramento, Calif. for more proceedings.
So, no this isn’t over. The actual trial still hasn’t gone down but this is definitely a big win for PwC.
A firm spokesperson provided us with the following statement: “PwC is pleased that the Ninth Circuit supported its arguments in this important case. The firm greatly values these employees and considers their work an integral part of PwC’s success.” An attempt to reach counsel for the plaintiffs was not immediately returned. Will keep you updated with any new details as we learn them.
Previous Coverage:
Campbell v. PricewaterhouseCoopers
The affiliates – Lovelock & Lewes, Price Waterhouse Bangalore, Price Waterhouse & Co. Bangalore, Price Waterhouse Calcutta, and Price Waterhouse & Co. Calcutta – must pay $6 million to the SEC, $1.5 million to the PCAOB and are barred from accepting U.S.-based clients for six months. The SEC fine is the largest ever levied against a foreign-based accounting firm in an SEC Enforcement Action and the PCAOB fine is the largest in the regulator’s history. PW India must also “establish training programs for its officers and employees on securities laws and accounting principles; institute new pre-opinion review controls; revise its audit policies and procedures; and appoint an independent monitor to ensure these measures are implemented.” The SEC’s press releas ilures “were not limited to Satyam, but rather indicative of a much larger quality control failure throughout PW India.”
More from Bob Khuzami & Co.:
“PW India violated its most fundamental duty as a public watchdog by failing to comply with some of the most elementary auditing standards and procedures in conducting the Sataym audits. The result of this failure was very harmful to Satyam shareholders, employees and vendors,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
Cheryl Scarboro, Chief of the SEC’s Foreign Corrupt Practices Act Unit, added, “PW India failed to conduct even the most fundamental audit procedures. Audit firms worldwide must take seriously their critical gate-keeping duties whenever they perform audit engagements for SEC-registered issuers and their affiliates, and conduct proper audits that exercise professional skepticism and care.”
For the PCAOB, Chairman James Doty:
“The reliability of global capital markets depends on auditors fulfilling their obligation to investors to perform robust audits, resulting in well-founded audit reports. Two of the PW India firms, PW Bangalore and Lovelock, repeatedly violated PCAOB rules and standards in conducting the Satyam audits. These confirmation deficiencies contributed directly to the auditors’ failure to uncover the Satyam fraud.”
And Claudisu Modesti, the Director of Enforcement:
“Accounting firms that audit U.S. issuers, including affiliates of international accounting networks, provide an essential bulwark for investors against issuer clients that are committing fraud. PW Bangalore and Lovelock repeatedly failed to meet their obligation to comply with PCAOB standards, and these failures contributed to PW Bangalore and Lovelock failing to detect the fraud committed by Satyam management.”
You can see both the enforcement actions on the following pages. As for the firm, here’s a portion from PW India’s statement:
The SEC and PCAOB orders found that PW India’s audits of Satyam did not meet US professional standards and, as a result, did not discover the fraud underlying Satyam’s 2005-2008 financial statements. The orders make clear that Satyam management engaged in a years-long fraud, going so far as to create scores of fictitious documents for the purpose of misleading the auditors.
These settlements, in which PW India neither admits nor denies the U.S. regulators’ findings, apply only to the U.S. regulatory enquiries into Satyam. Neither of the orders found that PW India or any of its professionals engaged in any intentional wrongdoing or was otherwise involved in the fraud perpetrated by Satyam management. The settlements mark the end of the Satyam-related U.S. regulatory enquiries concerning PW India and are a positive step and important milestone in putting the Satyam issue behind PW India. PW India remains hopeful of resolving the outstanding enquiry with the Indian market regulator.
Sounds a little defensive, doesn’t it? Here’s what PwC International Ltd. had to say:
PricewaterhouseCoopers International fully supports PW India’s decision to resolve these issues with the US regulators and is hopeful that an agreed resolution will also be reached with the Indian market regulator. The PwC network will continue to work closely with PW India as it fulfils its commitments to its regulators, its clients, and to the Indian and global marketplaces.
PricewaterhouseCoopers International is committed to a PwC presence in the vibrant and fast growing Indian marketplace.
“India is a key market for PwC and we are committed to working with our colleagues in India to build on a successful practice with quality at the centre of everything it does,” said Dennis Nally, Chairman of PricewaterhouseCoopers International. “The last two years have been challenging for PW India but I believe that PW India has learned the lessons of Satyam, made the right changes and is on a sound footing to move forward, dedicated to quality work.”
This may be a foreign firm but it makes us wonder if the SEC and PCAOB are just getting warmed up. Mr Doty and SEC Chief Accountant James Kroeker will be on the tomorrow’s panel that we will be live-blogging and it will be interesting to hear what they have to say.
HERE. WE. GO.
With PricewaterhouseCoopers’ communication about raises behind us, the proverbial dam of anticipation, expectation, and hopefulness gets closer to cresting. From the sound of things though, disappointment and frustration might be joining the flooding the gates as well.
Debate all you want about how much gravy is (or isn’t) on the train, but the partners in your respective firm will tell you that times are still tight. And to be, they’re probably not stretching the truth too far. Here’s what we know:
Revenues were down in 2009 for everyone. Want a re-cap?
Professional service firms are lagging in the market. When Wall Street (and the rest of America) began melting in 2008, accounting firms were still collecting on contractually agreed upon procedures fees. Fees were slashed when contracts were negotiated over the course of the next year, and it was these cuts in services and fees that cost employees their raises, bonuses and sometimes even their jobs. Fees might be back on the uptick; you would know better than me. But the general consensus in staffing camps around the country is that teams are doing more work with less billable hours in the budget. Less billable hours means…less revenue. Less revenue means…double digit bonus season? Doesn’t add up.
Expenses were cut but will the savings make enough of a difference? Recruiting budgets, headcounts, national trainings, corporate donations, and holiday parties – all areas of cost-savings. The financial faucets to many of these areas were adjusted; how soon they’re opened up again is hard to gauge. “Slowly” is the first word that comes to mind.
Raises will be purpose-driven – The vast majority of – if not all – well performing employees will receive raises this year. The pot will be spread out, but don’t be surprised when more love is thrown at strategic groups. Sorry, healthcare auditor, you’re simply not generating as much revenue as your firm’s M&A tax group. Fatter raises will be given to those that the leadership thinks are vital to generating continued revenues and/or will be expensive to replace should they move into the private sector.
The one upside to raises, small as they may be, is that they will drive up your base salary. If you do decide to test the job market, the last two years of effort in public accounting will be mostly represented in your new target number which will lead to a higher base elsewhere.
Stay tuned as we learn more about the state of raises across public accounting. As always, share your thoughts in the comments.