Now the auditor decides to name the junior staff member who...

Now the auditor decides to name the junior staff member who should be held responsible for the error!

it should be noted that a CATS liability of $65.8 was provided for in the Dec 11 accounts of CRF. In the event that Centro Retail is not forced to pay claimants of the class action, a write up of $65.8M or 5c NTA would resultin our accounts.

Given how much we are trading below NTA in $ and % value in comparison to our peers, IE CFX who is trading below 10% of NTA, the market is either factoring in a massive payout by CRF to claimants or the market has seriously undervalued its fundamentals.

The last few days in Federal Court have definitely been much worse for PWC than Centro. It will be interesting how this all unfolds....

Cheers

http://www.brisbanetimes.com.au/business/junior-employee-blamed-for-centros-bungled-audit-20120418-1x7j4.html

Junior employee blamed for Centro's bungled audit


April 19, 2012 Read later

THE PricewaterhouseCoopers partner who presided over Centro's flawed audit in 2007 has told a court he still does not believe he did anything wrong, and instead blames the debacle on a junior PwC staff member he supervised.

Stephen Cougle also denied accusations by Centro's lawyers yesterday that he was lying to the Federal Court or being deliberately dishonest about what happened at a Centro board committee meeting in September 2007.

Under cross-examination in a class action, Mr Cougle said he was disappointed that tasks recorded to be done in worksheets compiled by the PwC audit team were not done.


Those tasks included checking the size and maturity dates of Centro's debt facilities to ensure the property group's loans were properly classed as short-term or long-term.

Mr Cougle agreed with Centro's counsel that he did not believe he had done anything wrong as lead auditor and that in his view all the errors were done by PwC staff whom he supervised.

Asked who he blamed the most, Mr Cougle named Brad Duggan.

''Brad was supervising the staff in that area; they didn't do it,'' Mr Cougle said.

''He reviewed the section. That's where it should have been picked up definitively. It wasn't done. It's very disappointing to me,'' Mr Cougle said.

Shareholders are suing Centro and PricewaterhouseCoopers for losses arising after Centro revealed in late 2007 that it had wrongly classified billions of dollars of short-term debt.

The news surprised investors because Centro's unaudited 2006-07 accounts indicated it had no short-term debt.

Mr Cougle said Mr Duggan told him on August 28, 2007, that a $1.1 billion bridging facility had been wrongly classed as long-term debt in the preliminary accounts released a few weeks earlier.

Mr Cougle said the issue of debt classifications then was ''front of my mind''. He said he told Centro's head of accounting, Paul Belcher, about the error and suggested Centro might need to publicly disclose it.

But Mr Cougle said when he learnt Centro was not going to make an announcement, he adopted a plan proffered by PwC colleague Peter Fekete, that it could be fixed by mentioning it in a note to the final accounts.

''In my mind, I thought that would resolve the issue,'' Mr Cougle said, adding that he felt by adding the note ''the issue had largely been dealt with, the error had been adjusted''.

But Mr Cougle also insisted that the error was raised at a Centro audit committee meeting a week later, although this has been denied by Centro directors and senior executives.

Mr Cougle could not explain why an issue that he thought would have generated a lot of discussion is not mentioned in the committee minutes or remembered by others at the meeting.

Mr Cougle is not being sued personally.

PwC has made limited admissions that it breached its duty of care to Centro, but it insists Mr Cougle was ''the auditor'' for the purposes of making representations in the audit opinion letter.