PwC failed to follow its own auditing tips

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New Delhi: One of the big four global professional services provider—the PricewaterhouseCoopers—should have followed its own advice. Earning a revenue of over $500 million, the service firm, which was crowned audit firm of the year 2008 during CFO Awards, listed in the top-tier of Australian tax advisers survey 2009 conducted by International Tax Review and won the BRW Client Choice Awards for being the best accounting firm and market leader for three years in a row, has been prolific in prescribing corporate governance ethics in its global reports, and white papers, and has released four global economic crime surveys.

Apart from advocating a convergence of financial reporting and accounting standards across the globe, which PwC maintains will contribute to the free flow of global investment and help achieve substantial benefits for all capital markets, the firm has prescribed tips in its whitepapers released periodically to prevent corporate fraud. Also, it has asked to be uncompromising in matters related to ethics in corporate governance.

In a series of such documents termed viewpoints, PwC addresses many such issues, including how to enhance the effectiveness of auditing committees and raise the bar in reporting norms to the capital market so that companies are not in for unpleasant surprises—whether these are erroneous financial statements, ethical scandals or inadequately managed risks—as these have the potential to “wreak havoc among corporate reputations and affect share price values”.

A PwC viewpoint report, chalking out a plan for auditing firms to follow, says audit committee meetings should ensure that all relevant issues are included and discussed. Active chairs in the committee should also keep a tab on current market developments, discuss issues with management, internal and external auditors, and prepare for meetings. Chairs need to be ready and willing to take the lead, encourage engagement of all directors, set agenda and “run meetings in interests of board and ultimately the shareholders—not for the benefit of management, lawyers, auditors and other advisers”.