Audit watchdog to criticize PwC: memo from firm

Thu Mar 7, 2013 12:19pm EST
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By Dena Aubin

(Reuters) - The U.S. regulator of corporate auditors will soon release a report criticizing quality controls at PricewaterhouseCoopers PWC.UL, according to an internal PwC memo obtained by Reuters.

The report from the Public Company Accounting Oversight Board (PCAOB) will fault PwC for not promptly addressing quality control problems found during inspections of some of its 2007 and 2008 audits, according to the memo.

The March 7 memo was signed by PwC U.S. Chairman Robert Moritz.

In the memo, PwC defended its efforts to improve quality controls and said it was disappointed with the watchdog's report. It said the PCAOB's criticisms "relate to some of the most complex, broad, judgmental and evolving areas of auditing."

Spokeswomen for PwC and the PCAOB declined to comment on the memo.

Only once before has the PCAOB made public a report criticizing quality controls at a Big Four audit firm. In October 2011, it faulted Deloitte DLTE.UL for not doing enough to promptly improve audit quality systems.

Deloitte, PwC, KPMG and Ernst & Young are the four largest corporate auditing firms, dominating their market worldwide.

Congress formed the PCAOB in 2002 after accounting scandals at several large corporations, including Enron Corp. Previously, the audit industry was self-regulated.   Continued...

Media persons and policemen gather outside the office of PricewaterhouseCoopers (PWC), the auditors of Satyam Computers Services, in the southern Indian city of Hyderabad January 13, 2009. REUTERS/Krishnendu Halder