Which brings me to the current CMC fiasco.Pwc has been taken to court after its audit report was accused of making 'findings based on unreliable and speculative information'.Mr Muthoka, a shareholder,is questioning the integrity of the audit firm.
A SouthAfrican auditor, who was hired by the Capital Market Authority (CMA) to look into the CMC debacle , has sharply criticised the forensic report that PWC published on the state of the motor dealer’s finances.He dismissed the report as inconclusive and that the firm submitted open-ended findings without sufficient evidence.Pwc has also come under criticism for making firm conclusions even where it had no evidence to support its findings.
There are claims in the media that Deloitte, who were CMC's auditors before quitting early last month , has been uncomfortable in the task of auditing the motor firm since rival PricewaterhouseCoopers (PwC) was called in to conduct a forensic audit into the company’s finances since 2006.Given that PwC were themselves CMC auditors until the end of 2005,the restriction of forensic audit to the period after PwC’s exit is, as Deloitte's believes, selective and risky to its interests as a consulting firm.At the same time the issue of impartiality in the forensic audit also come into sharp focus when you consider the historical relationship.
A background check of PwC’s involvement in scandals reveals quite a few.In fact, Pwc has been the auditors of the most notorious financial scandals of the past 15 years ,with the most recent black eye coming from its involvement with MF Global in which the U.S. regulators subpoenaed Pwc for information on the segregation of assets belonging to clients trading on U.S. commodity exchanges .MF global is only the latest of PwC’s trail of ‘negligence’ and ‘bad behavior.’ According to Wikipedia, PwC was involved in improprieties with the companies AIG, Refco, General Re Corp, Berkshire Hathaway, Tyco, the Sityam fraud, Yukos prosecution scandal, the Global Trust Bank misconduct (leading to a one-year ban by India’s central bank from doing business in India), the Transneft Russia scandal and Britain’s Northern Rock case.
What I have learnt from Pwc is that they subscribe to 'he who pays the piper calls the tune'.It's difficult to get an objective finding from this firm.Which raises the question what is the use of this auditors if they only pass what those in office say or want.Can investors depend on this so called 'big firms' to offer objective reports whenever they are contracted to do a forensic audit.