Two accountancy firms dragged over the coals by regulators

Industry news roundup: week ended 14 Nov 2013:

This week, not one but two major accountancy firms have been called on the carpet for their poor behaviour, and as far as I’m concerned it’s about damned time.

If it seems to you like big-name accountants seem to get away with murder, I’d be inclined to agree with you. However, there has been at least some movement towards reining in too-powerful accountants this week. In fact, industry powerhouse PricewaterhouseCoopers got an earful this week from Great Grimsby MP Austin Mitchell. Mr Mitchell was absolutely vicious with PwC, claiming that the firm was in collusion with Lloyds Bank to drive a company into administration using strong-arm tactics.

The story is rather grim: Leeds-based Premier Motor Auctions was forced into a sale back in 2008 after a PwC executive placed on Premier’s board by Lloyds, which had been running the company’s overdraft facility at the time. This PwC plant ramped up Premier’s borrowing to an eye-watering £3.75 million, destroying the company’s financial health and leaving it ripe for being placed into administration. Guess who was named as administrator? That’s right – PwC.

Both PwC and Lloyds have been tap-dancing to avoid any blame for the issue, but you know as well as I do that the chances this whole thing was an accident or a coincidence is about the same chance that David Cameron’s going to get a job as a plumber after he leaves office. At least the Prime Minister wouldn’t deign to sully his hands the same way PwC and Lloyds have done!

Meanwhile, across the pond in the US there’s one major accountant that’s been barred from performing any more audit work as punishment. Sherb & Co, based out of New York, stand accused of bungling the audit of not one, not two, but three Chinese firms listed in the US. The Securities and Exchange Commission, the US regulatory body, investigated the matter and discovered that there was deliberate false representation within the audit reports.

I know it’s a bit petty but it’s nice to see that chicanery and deceit aren’t endemic to just the UK. At least Sherb & Co was caught red-handed and had the guts to pay the fine and except its punishment – unlike PwC and Lloyds, which are still crying about how they’re being unjustly accused of wrongdoing. Right, pull the other one while you’re at it.

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