US watchdog refers PwC to ethics panel
A US Department of Justice (DoJ) agency has referred PwC to the AICPA professional ethics division after finding ‘extensive deficiencies’ in an audit carried out by the US firm into federal grant compliance by a charity called Big Brothers Big Sisters of America (BBBSA)
The Office of the Inspector General (OIG) said its quality control review had found that PwC‘s documentation of its 2011 audit of BBBSA was not sufficiently detailed to provide a clear understanding of the nature, timing, extent, and results of audit procedures performed, the audit evidence obtained and its source, and the conclusions reached. In addition, some of the audit documentation contained contradictory information.
The OIG undertook the review because it had developed concerns during its own audit of BBBSA’s use of DoJ grant funds. The mentoring organization received over $23m (£14.7m) in DoJ grants between 2009 and 2011. As a result of the failures and weaknesses identified in its own audit, the OIG said it had questions over $19.4m (£12m) of funding.
In assessing PwC’s original work, the agency found that multiple audit steps and procedures were not adequately performed or documented, and supervision was not sufficient to identify the errors and omissions in the audit work and documentation.
The OIG concluded that PwC was not in compliance with government audit standards for reporting, evidence, and supervision, and the extent of the weaknesses identified raised concerns that PwC may not have been in full compliance with other government auditing standards, such as the standard for exercising professional judgment.
After the OIG brought its concerns to PwC’s attention, PwC determined that its prior audit report could not be relied upon and withdrew it in July 2013 so that additional audit work could be performed.
A revised PwC audit report examining BBBSA was submitted in January 2015. In contrast to the prior PwC report, which contained unqualified opinions and included no findings or questioned costs, the revised PwC report rendered an adverse opinion on BBBSA’s major program compliance, contained eight findings, and identified substantial questioned costs.
The OIG accepted PwC’s revised audit report as generally meeting government audit standards. However, the agency has referred its findings regarding PwC’s prior audit report to the AICPA Professional Ethics Division for its consideration.
A PwC spokeswoman in the US said in a statement that the audit firm was pleased that the inspector general accepted the revised audit report.
The OIG report is here
Source: accountancylive – US watchdog refers PwC to ethics panel
