If you try to do something to outsmart PCAOB inspectors, more often than not you’ll end up looking like the big dummy. Case in point, former PwC senior manager Ryan Collins, who was barred by the U.S. audit cops on July 21 for altering workpapers.
Collins, who worked at P. Dubs from September 2010 until May 2019, can appeal for reinstatement in one year.
In a disciplinary order, the PCAOB said Collins was uncooperative with a board inspection:
Collins was a senior manager for PwC’s integrated audit of the financial statements and internal control over financial reporting of an issuer (“Issuer A”) for the fiscal year-ended September 30, 2018. As part of the Board’s annual inspection of PwC for 2019, Board staff selected the Audit for review. During field work for the Inspection, Collins: (a) made a misleading statement to the Board’s inspectors; and (b) prepared a misleading document that he understood would be presented to the inspectors in response to a specific request from the inspectors. Through his actions and omissions Collins violated his obligation to cooperate with the Board’s Inspection.
So Collins began working on the audits of Issuer A in 2010 and was on the audit for each fiscal year through 2018. He also participated in two PCAOB inspections of Issuer A audits.
In early March 2019, Collins got wind that the PCAOB would be a-comin’ to inspect the audit of Issuer A and that taxes would be one of the focus areas for the inspection. The inspectors wanted answers to some questions around transfer pricing, so Collins opened the archived workpapers for the 2009 audit of Issuer A and found a memo that related to transfer pricing.
And that’s when things came off the rails:
After downloading the 2009 Memo, Mr. Collins edited the 2009 Memo, which included deleting both the date on the memo and information that was not relevant to the questions of the inspectors. Collins made additional changes to the 2009 Memo the following morning (as modified, the “2019 Memo”).
Collins and other members of the engagement team for the Audit met with the Board’s inspectors during the morning of April 4, 2019. During that meeting, another member of the engagement team used the 2019 Memo to answer questions from the inspectors related to transfer pricing. At some point during that meeting, the other engagement team member provided the 2019 Memo to the inspectors.
The inspectors asked what the document was and why it was not dated. Collins responded that the document was from the “2010 audit.” Collins did not inform the inspectors that the 2019 Memo was, in fact, prepared the previous day and finalized earlier that same morning, April 4, 2019. Likewise, he did not explain to the inspectors that the 2019 Memo was based on a 2009 work paper, not a 2010 work paper.
His decision to tell the inspectors that the document was from 2010, and not from 2009, was intentional. Collins knew that information PwC sent to the Board’s inspectors in advance of Inspection field work stated that Collins started working on the Issuer A audit in 2010, and Collins thought it would raise questions if he identified the document as predating his work on the Audit.
After the meeting at which Collins provided the inspectors the misleading information about the 2019 Memo, the inspectors asked the Audit engagement partner to provide the original memo from the archived 2010 work papers. The engagement partner asked Collins to send a copy of the original work paper to the engagement partner.
Collins understood that the engagement partner would provide that document to the inspectors. Collins went back into the archived 2009 work papers, downloaded a copy of the 2009 Memo, and changed the date on the memo from 2009 to 2010, i.e., to a date that was consistent with his misrepresentation to the Board’s inspectors earlier that morning. Collins then sent that document (“Purported 2010 Memo”) to the engagement partner. And the engagement partner provided the Purported 2010 Memo to the Board’s inspectors.
At no time did Collins advise the inspectors that the Purported 2010 Memo was really from the 2009 work papers and that Collins had changed the date on that document on April 4, 2019.
It’s too bad Collins didn’t stick around long enough to make partner at PwC because Big 4 audit partners from around the world get a kick out of altering workpapers.