more-arw search

Q&A Forum

PwC on trial for not spotting $2.9bn fraud

Headline from the Financial Times.

"The biggest ever trial of an audit firm has a lot of lurid elements: a $2.9bn fraud, carried out over years, in which cash was looted to pay for a corporate jet, a seaplane and a vintage car collection. But the jury is basically being asked to answer a simple question: did PwC do all that it could to stop it? "

What's your opinion?


Title: Chief Financial Officer
Company: Pro Tech International
(Chief Financial Officer, Pro Tech International) |

Wayne, FYI, the link you posted requires a subscription to review the article.
Regarding your question, (and without being able to read the article), it would seem to me that shareholders pay enough money to auditors that the auditor should take some responsibility, (liability), for not catching a material misstatement of the financial records in the amount indicated in your question. My guess is they issued an opinion, but had the adequate disclaimers in the cover letter that they will get out of at least some of the liability they should be assuming for their fee.

Margaret Benson
Title: owner
Company: Margaret M Benson LLC
LinkedIn Profile
(owner, Margaret M Benson LLC) |

Wayne, you want opinions, you need to have the article accessible for full content. Your shortened version, indicates on the surface that PwC should indeed have some responsibility, that is what CPA, are suppose to be catching with audits generally. However without understanding the full picture it is hard to say. It is quite possible to hide from the audit that kind of theft, from a regular audit. So there are a lot of factors unknown to give you a true opinion.

Topic Expert
Wayne Spivak
Title: President & CFO
LinkedIn Profile
(President & CFO, |

My apologies, but I don't have a subscription to FT and was able to read the article.

Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

If this is concerning the mortgage bank/firm in Florida (?), It is a conglomeration of FUBAR (is that acronym allowed in here?) affecting a lot of entities to include PWC, Freddie Mac, Ginnie Mae and don't forget the regulatory auditors. It is an extensively complex process to originate fraudulent loans and then selling them, affecting almost ALL facets of the bank. I would say that if PWC was not able to uncover it with one audit facet/process, then they COULD HAVE uncovered it with others. Not to mention that this included multi year audits. Says something about just following last year's audit process.

I will say this, if there was auditor rotation, the percentage of uncovering the fraud would have shot up dramatically. Then again, the decision to do auditor rotation lies with the offending entitiy.

From an external stand point.....It could have been stopped/uncovered if only Freddie Mac raised the red flag when they stopped buying the mortgages. Instead, they kept it to themselves. Or GInnie Mae could have asked Freddie Mac for their experience with the firm before buying the mortgages.

Note: As an auditee (Bank), I symphatize about explaining everything to a new audit firm (and regulatory teams) or even to a new team member (same firm) year in and year out. But I realized that that can be a good thing and part of the job.

Products and Companies

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.