Hmmmm doesn’t look good for PWC…Have a read of the latest...

Hmmmm doesn’t look good for PWC…

Have a read of the latest developments

According to PWC if the audit junior staff in the audit stuff up, the partner doesn’t accept responsibility….


http://www.smh.com.au/business/centro-breach-admitted-20120416-1x3q5.html

http://www.theaustralian.com.au/business/opinion/centro-pricewaterhousecoopers-play-the-blame-game/story-e6frg9io-1226330735649

Centro breach admitted
Leonie Wood and Ben Butler
THE auditing firm that presided over one of Australia's biggest accounting blunders, Centro's multibillion-dollar debt misclassification, has made dramatic, though limited, admissions that it breached its duty of care to the property group.
But PricewaterhouseCoopers has held firm against claims by shareholders that it misled or deceived investors, saying it was not PwC but the individual audit partner, Stephen Cougle, who made inaccurate representations about the quality of Centro's flawed 2006-07 audit.
That position triggered a blistering exchange in court yesterday between Federal Court judge Michelle Gordon and PwC's counsel as the judge strongly warned that if PwC persisted in holding a position that she ultimately found had no basis, the court could order costs against the counsel and lawyers personally.

Justice Gordon also told PwC's counsel, Richard McHugh, SC, that she found his position ''surprising'', and asked how it could be maintained if the audit staff of PwC under Mr Cougle ''did a terrible job''.
Mr McHugh shot back: ''I did not admit that it was a terrible job. I admit they did not do enough.''
Asked by Justice Gordon: ''What is the distinction?'', Mr McHugh replied ''It's the vituperative''.
Later, Justice Gordon demanded Mr McHugh state whether PwC's position was that the firm made representations to Centro about the quality of the audit or the audit partner, Stephen Cougle, did.
''The representation was made by the audit partner, Stephen Cougle,'' Mr McHugh replied, adding sharply that Justice Gordon should not refer to the issue of costs. ''That is grossly inappropriate,'' he said.
In its written submissions, PwC said ''Mr Cougle asked the right questions'' when he learnt in August 2007 that a $1.1 billion short-term loan had been wrongly classed as long term. But, according to PwC's submissions ''he got the wrong answer'' from his own staff.
PwC claims Mr Cougle had a rational basis for giving Centro's accounts the green light, and that is because he relied on PwC's staff, even if that information was wrong.
It is at least the second time Justice Gordon has warned parties in the enormously expensive case that provisions of the Federal Court Act allow courts to award costs against lawyers personally if they have not acted to resolve disputes quickly, efficiently and inexpensively.
The Centro class action, now in its seventh week, has already cost many millions of dollars and is expected to run until at least late May.
Two sets of Centro shareholders are suing the group and PwC for at least $200 million of damages, saying the company failed to properly disclose in 2007 that it had billions of dollars of short-term debt. Centro only revealed in December 2007 that it was struggling to refinance the debt, an admission that emerged as world credit markets seized and global banks backed away from risky lending.
PwC's admissions that it failed to take reasonable care and breached its duty to Centro are limited to the period after September 6, 2007, when the audit finished, but it does not admit it failed in any way before then.
As well, it has hit back against Centro saying the company should have revealed it was facing increasingly difficult discussions with its banks about refinancing the group's short-term debt.
''By September 6, the position was sufficiently dire and the strategy [of refinancing its debt] had sufficiently failed [so] that those were matters that should have been disclosed to the market, not just to Pricewaterhouse but to investors,'' Mr McHugh said.
''The 'fairyland' here was in the boardroom of Centro. In the face of mounting refinancing problems, they continued as if everything was fine.''
Mr Cougle is expected to begin giving evidence today.