PwC pays $7.9m to settle improper conduct claims
PwC has agreed to pay US regulators $7.9m to settle charges of improper conduct during its audits of over a dozen companies, another setback to attempts by the Big Four accountancy firms to restore their reputations following a series of controversies.
The Securities and Exchange Commission said on Monday it had reached a settlement with the accounting firm, having accused it of multiple violations of rules governing what other services auditors can offer during the course of an audit.
Anita Bandy, associate director of the SEC's enforcement division, said: "Auditors play a fundamental role in protecting the reliability and integrity of financial reporting and must ensure that non-audit services do not come at the cost of their independence on audits of public companies.
"PwC repeatedly provided non-audit services without having effective quality controls in place for monitoring whether the services impaired its independence on audit engagements and were properly disclosed to audit committees."
The commission accused the firm of breaking audit rules and compromising its independence on multiple occasions.
The most serious breach came in 2014, when PwC helped one of its clients implement and manage software while also conducting that client's audit. Doing so compromised PwC's independence, the commission found.
Brandon Sprankle, a PwC partner who supervised the software implementation, was charged separately and agreed to a ban on serving as an auditor for SEC-registered companies for at least four years. PwC said Mr Sprankle remained a partner there.
A second set of violations relate to 19 interactions with 15 different clients from 2013 until 2016, where PwC is accused of having told its clients that certain services it was providing were audit-related when they were not. By doing so, the commission alleged, PwC circumvented having to get approval from the clients' audit committees.
PwC did not admit or deny guilt. A spokesperson said: "PwC takes independence and its important role in the capital markets seriously. PwC is pleased to have resolved this matter and remains committed to continuous improvement. Through our ongoing efforts, we have and continue to add additional processes and controls to maintain independence."
The settlement is the latest blow to the reputations of the Big Four accountancy firms - PwC, KPMG, EY and Deloitte - which have faced scrutiny in the UK and elsewhere over their independence and the potential for conflicts of interest in their work for clients.
PwC UK pledged at the start of this year, following pressure from politicians, to stop providing consulting services to its listed audit clients in an effort to restore public trust in the sector, which has been shaken by scandals and high-profile corporate collapses.
Consulting is typically better paid and more profitable than audit work, prompting concerns that an auditor may not be motivated to properly challenge a client's accounts or its management if it fears losing more lucrative advisory work.
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