Accounting News Roundup: PwC Faces Whistleblower Retaliation Suit | 05.11.18

pwc culture

PwC Whistleblower Alleges Fraud in Audits of Silicon Valley Companies [POGO]
The Project on Government Oversight has a nice scoop on the tale of Mauro Botta, a former PwC senior manager who after spending a dozen years in the firm’s Silicon Valley office, became a whistleblower. Botta told the Securities and Exchange Commission in a 2016 complaint that the firm “was pulling its punches—trying not to flag too many problems with companies’ internal controls.”

Botta further described the problem:

“the risk of collusion between auditors and management in this valley . . . with management paying us the fees and auditors picking and choosing what to call an audit issue.”

It’s a familiar story: Botta, who came from PwC’s Italian firm to the U.S. in 2004, had stellar performance reviews until he didn’t. One performance evaluation he provided to POGO details PwC partners saying things that PwC partners wouldn’t necessarily want anyone outside the firm to hear, such as, “As a partner you have to have the position that you want these guys to like you,” and “When you get to be a partner they need someone to confide in and trust who will look out for you,” and “When you are a 1 rated top performer/partner, you tow the party line.” Also, there’s this:

In answer to the question “What is preventing Mauro from being rated a top performer and/or progressing to partner?” the feedback survey described him as “an emotional Italian guy,” a comment he has cited as evidence of ethnic bias.

Botta was fired shortly after he filed his whistleblower complaint with the SEC. He has now filed a lawsuit, alleging that the firm retaliated against him.

US watchdog bans former Deloitte Turkey chiefs [FT]
The PCAOB has banned two of Deloitte Turkey’s former CEOs “for failing to prevent individuals at the firm from altering documents ahead of an inspection.” One professor drops a sufficiently scathing quote: “The case exemplifies the deep ethical rot in auditing today.”

PPG Industries fires controller as it finds more accounting mistakes [MW]
Oops:

PPG said that errors pertained to the first quarter and would result in a $7.8 million net decrease in income from continuing operations before taxes.

PPG also said that millions in improper reclassifications “from income from discontinued operations to income from continuing operations” were made. The company says this all went down at the now-former controller’s direction.

Steinhoff on Hunt for Executives Behind Accounting Scandal [Bloomberg]
The company says it is “taking legal advice on how to seek justice.”

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