As has been reported, MF Global may have done some commingling of client money with its own which is a big no-no. This means the Feds are now on the case, which means typically cool-as-a-cumcumber cucumber Jon Corzine could be sweating a bit. MF Global’s auditor, PwC, on the other hand, has it made in the shade (at least somewhat). Why? How? Alison Frankel over at Reuters tells us:
[E]ven if it turns out that MF Global was illicitly dipping into customer accounts, if that commingling of funds helped keep the business afloat, PwC is protected by in pari delicto.
If you’ve never heard of in pari delicto, that’s the obscure doctrine that says a bankruptcy trustee that’s representing the corporation can’t go after another party for stunts pulled by said corporation. In other words, if MF Global commingled funds, if (probably more like “when”) the trustee attempts to recover funds from PwC, the firm will be protected. Francine McKenna has been writing about in pari delicto since early 2010 saying that it’s “like a pair of needle nosed pliers by audit firm defense lawyers to diffuse a bomb” and last year’s ruling for KPMG in Kirschner v. KPMG and the favorable ruling for PwC in Teachers’ Retirement System of Louisiana v. PricewaterhouseCoopers LLP reaffirmed that sentiment. PwC probably isn’t sweating this.
But what about PwC’s audit opinion on MF’s financial statements? The Grumpies pondered the idea of what might constitute grounds for P. Dubs to issue a going concern opinion for MFG:
Might that include four years (2008-2011) of massive losses, as occurred at MF Global? Might that include severely negative free cash flows for three of the last four years? Might that include an exposure to European sovereign debt that will lead to greater future losses? Might that include several downgrades in the credit ratings?
Say you’ve got a broker-dealer client that has no European sovereign debt exposure and isn’t covered by a ratings agency. You simply have massive losses for four straight years and negative free cash flow for three out of the last four and few signs that things are turning around. Do you think there’s any doubt about this business’s ability to continue as a going concern? What about substantial doubt? Throw in the Eurotrash debt and junky bond ratings again and where do you stand now? Yikes.
But PwC was cool with it. We probably know the why (money and client retention, natch). But how? Love to hear some opinions on that. No matter the answer, our lawyer friends will do well by it all.
ACCA is the worst company I have ever worked at. My line manager, Abdul, knew absolutely nothing and just had unrealistic expectations. He notoriously didn’t reply to my emails, didn’t provide the requested ACCA documentation and for months didn’t manage to ensure access to the basic tools I had to work with in ACCA. At the same time he gave me “to do” list with nearly 30 points on it.
The first task he gave me was to write a document that had to be complementary to ACCA global plan – a document which, contrary to what was stated in my objectives and what was explained to me by my line manager, hadn’t been created. In the end I had to write twenty pages document without essential documentation.
When I asked about the possibility of shadowing a colleague holding the same position, I was informed by my line manager that another employee on the same position doesn’t hold the same duties and responsibilities as I do although the position is the same. What is more, I didn’t receive my payslips on payday while working in ACCA and had no insight to the way in which my salary was calculated. As ACCA didn’t reply to my payslip request, the company had to be aware that ACCA is not acting within the law.