PwC August 2017 Fines
PwC Fined Over Audit of Merrill Lynch
First lets go over PwC’s botched audit of Merrill Lynch.
SEC rules require brokerages to hold customer money in segregated accounts that are shielded from creditor claims. Unfortunately Merrill lynch did not do this and they exposed billions of dollars to creditors claims. They were fined $400 million by the SEC and now PwC has to pay up for completely missing all of this as their auditor. They had to pay the PCAOB $1 million which seems like chump change compared to the amount that Merrill had to pay.
PwC Fined Over Audit of RSM Tenon in the UK
Next up is a fine that originates in the UK. PwC set a record in the UK. They were hit by the largest ever fine of 6 million pounds. This is the largest ever fine levied by the Financial reporting council. The FRC found extensive misconduct by PwC on the audit of RSM Tenon. Hysterically, RSM tenon was an accounting firm. It was the UK’s 7th largest accounting firm before it went belly up. PwC did not obtain sufficient audit evidence and did not exercise professional skepticism. I think that is fancy wording for say that PwC didn’t see RSM Tenon’s demise coming.