You may have noticed, maybe not, but PwC is in the midst of a bad publicity streak. Last month, one partner screwed up the hand-off of the Best Picture envelope at the Oscars while the other partner froze. A few days later, federal agents raided Caterpillar’s headquarters over its offshore tax practices that PwC helped develop. And last but not least, the firm is slugging it out in court with MF Global and it doesn’t seem to be going well.
As we’ve noted, one Big 4 firm is usually hogging the spotlight for a series of blunders. EY had it for awhile last fall. Deloitte took over in December. And now PwC has dominated the late winter/early spring. One day, another Big 4 firm will succeed in bumbling into the role of Big 4 punching bag. Just not today:
The Public Company Accounting Oversight Board today announced sanctions against a former partner of PricewaterhouseCoopers Auditores Independentes in Brazil for audit failures and violations of PCAOB rules and standards.
Wander Rodrigues Teles was the lead partner for PwC Brazil’s 2010 and 2011 audit work on the Brazilian subsidiaries of Sara Lee Corporation, including Sara Lee Cafés do Brasil Ltda.
The PCAOB found that Teles failed to adequately respond to indications that Sara Lee Cafés may have overstated its accounts receivable.
How bad was that overstatement? Bad enough that Sara Lee had to restate its 2010 and 2011 results in 2012 where it cited “accounting irregularities in its Brazil operations, including the overstatement of accounts receivable.”
The PCAOB order is a pretty clinical read; you won’t find any embarrassing exchanges like there was in the Deloitte Brazil cover-up situation. Still, Teles ignored plenty of risks, didn’t require further testing where it was warranted, failed to recognize offsets to the receivables, etc. etc. The most orthodox of auditors will surely find it reprehensible.
As for punishment, the PCAOB fined Teles $10k and barred him from associating with a registered firm for two years. On the bright side, Warren Beatty doesn’t know who he is.