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Clinton Foundation Could Be PwC’s Enron, Says Guy

Posted on by Caleb Newquist

If you need a good laugh today, I invite you to read this post from WND about how the Clinton Foundation's financial troubles could bring down PwC. It's a hoot.

A respected Wall Street analyst who has been investigating the Clinton Foundation’s finances alleges the “Big Four” accounting firm PricewaterhouseCoopers was a willing participant in a scheme by the Clintons and their associates to become personally enriched by the foundation, a crime known as inurement.
 
Charles Ortel, a frequent guest on Bloomberg television and a contributor to the Washington Times and others, says in a draft report that he found “the PWC accounting work product for 2013 is riddled with uncorrected errors and falsehoods” as well as procedural defects so severe he has raised the possibility “the Clinton Foundation might be PWC’s Enron.”
I grant you, the Clintons are incredibly effective at embarrassing themselves with things that really aren't worth getting worked up about (e.g. bad real estate investments, email, blowjobs) but this ain't Watergate and it sure as fuck isn't Enron. In the realm of crackpot theories, this one falls into the "downright embarrassing" since Ortel's proof for "uncorrected errors and falsehoods" relies on a shocking display of ignorance when it comes to auditing and accounting matters. 
“PWC states that the firm relied upon the work product of BKD for 2012, implying that in preparing the 2013 audited financial statements PWC accepted the BKD financial statements without modification,” Ortel explains.
 
“This is certainly not the case,” Ortel continues, “as can be clearly seen by comparing BKD’s financial statement for the Clinton Foundation for year-end 31 December 2012, with the consolidated balance sheet for the Clinton Foundation that PWC used as a starting point on 1 January 2013 in its 2013 audit.”
First of all, no. Auditors who rely on the work product of others do not simply "accept financial statements without modification."  Second of all, here are the numbers they present as further evidence:
 
Yes, $3 million of reclassifications will doom PwC.

This is where the freaking out begins:

Ortel says the adjustments made by PWC to BKD’s audit of the Clinton Foundation’s financials at Dec. 31, 2012, raise several troubling questions:
Okay, not really but we'll indulge you.

How did $3.1 million in cash disappear?

It didn't disappear.

Cash is by far the easiest asset to quantify and verify – what did BKD miss in its audit and what explains PWC’s conclusion?

BKD didn't miss anything. Accountants and auditors reach different conclusions all the time. 

How loose are the financial controls over the Clinton Foundation’s cash accounts at headquarters and in the many foreign locations in which it operates?

Oh, shut up.

What factors led PWC to place a significantly higher value on the Clinton Foundation’s investments as of Dec. 31, 2012 ($3,449,166 as compared to $1,638,057)?

Sometimes cash is, like, cash cash. You know, the paper that's stuffed into briefcases and handed over to people in parking garages to make murders look like suicides. Other times cash isn't cash because it's not really liquid, so people — auditors, usually — call it investments. Call it a hunch, but PwC figured that some of this "cash" wasn't really "cash" but instead was "investments," so they reclassified (i.e. moved a few things around) it as "investments."  Accounting can be tricky!   

What entities agreed to lower the stated value of obligations owed to them by the Clinton Foundation as of Dec. 31, 2012, and what were the specific reasons for these downward adjustments?

They probably just paid some bills, bro.

How did the total downward adjustment in liabilities happen to equal precisely the net amount by which the Clinton Foundation’s assets were reduced by PWC as of Dec. 31, 2012?

Sigh. ALL TOGETHER NOW: Debits = Credits.
 
I suggest that you all go read about this Enron-Watergate love child scandal. You can thank me below. 
 
[WND]

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The Financial Times published an interview with PwC International Chairman Dennis Nally over the weekend and we learn a few interesting things about DN that you probably didn’t know. For starters, he’s very aware that his firm is in a tussle for title of the largest professional services firm ON EARTH, “We’re in a real dog race to continue to sustain our leadership position as the largest professional services network in the world,” he told the FT. Of course this gives us the impression that Denny doesn’t believe that P. Dubs has relinquished the Biggest of the Big 4 title, as some other CEOs have claimed.

And as you might expect, there are various softening questions thrown around, including:

1) Leaders he admires – he wants to meet The Pope because “[Nally] seems impressed by the feat of co-ordination.”

2) Feats of strength – He practiced hot yoga to “strengthen his golf swing” but gave it up because “I found that you had a tendency to over-workout your muscles.”

Despite those little tidbits, Helen Thomas manages to get under Nally’s skin a little when she asks if “auditors should rightly find themselves in the line of fire” when fraud or “disingenuous” accounting occurs:

Mr Nally crosses his arms across his monogrammed shirt, for the first time looking a touch defensive. “There are professional standards out there [and] an audit is not designed under those standards to detect fraud,” he says, pointing out that detecting fraudulent behaviour rests on other indications including a company’s governance, management tone and control systems. “The reasons it has been done that way is because, while we always hear and read about the high-profile fraud, the number of those situations that you actually encounter in practice is very de minimis.

Notice that he doesn’t directly address the “disingenuous” accounting. Examples which might include, say, AIG and Freddie Mac, but rather addressed fraud which is easy to fall back on, since the expectations gap is so blatant (something he has mentioned before).

His statement also appears to indicate that he feels situations like Satyam are immaterial, unless by “de minimis” he intended to mean “rare in occurrence.” But, then again, I suppose semantics are also de minimis.

The man who would be biggest [FT]