PwC, the Big 4 accounting firm most likely to request a mulligan on 2017, has been censured and fined $1 million by the PCAOB for violations in its audit of Merrill Lynch. The PCAOB order follows a SEC action against Merrill from last year after the broker “held tens of billions of dollars” of customer funds “that were subject to liens by third parties.” For those of you that like quoting citations, that violates Commission Rule 15c3-3, 17 C.F.R. § 240.15c3-3, aka the “Customer Protection Rule.”
As for PwC, the firm was supposed to:
obtain sufficient appropriate evidence to support its opinion about (a) whether Merrill’s internal controls over compliance with the Customer Protection Rule were effective during the period of June 1, 2014 to December 31, 2014 and at the end of FY 2014, and (b) whether supplemental information in certain filings by Merrill concerning its compliance with the Customer Protection Rule were fairly stated in all material respects, in relation to Merrill’s financial statements as a whole. However, PwC failed to obtain sufficient evidence in each of these categories.
In a statement, PwC said, “We are pleased to have resolved the matter. Delivering quality is our top priority.”