PwC audit partner ‘dependent’ on actuaries

PwC audit partner David Law would have come to the same conclusion as E&
Y given the advice available at the time, the Big Four firm alleged today.

The expert witness for Equitable was ‘dependent’ on the advice of actuaries
and would not have come to the conclusions he did without them.

On a morning of intense questioning at the resumption of the Equitable/Ernst
& Young case at the High Court, Jonathan Gaisman QC, for E&Y, suggested
that Law’s opinion on the case was based solely on the views of actuaries
sympathetic to Equitable’s case.

Law’s expert testimony alleges that E&Y should have qualified their
opinion in signing off Equitable’s accounts in the late 1990s.

E&Y contended today that, in the same situation as E&Y’s audit
partners in the late 1990s, with advice from different actuaries, Law himself
would not have qualified the accounts.

‘What does your evidence amount to?’ Gaisman asked, on a morning of such
intense questioning that he was on occasion restrained by the Judge.

Gaisman asked Law a series of hypothetical questions about the audit,
culminating by asking whether he would have identified key audit principles
outlined by his colleague David Parmee, ‘had you not been served them up by Mr
Parmee and Mr Arnold,’ another expert witness in the case.

‘I would like to think I would have done,’ Law replied.

Law insisted that Parmee’s view was one with which he agreed, and said he
would have disagreed with alternative views laid out by Chris Headdon, the
society’s former chief actuary, and E&Y.

Had he been presented with them, he would have sought alternative actuarial
advice, he said.

E&Y argues that there was no one way of accounting for guaranteed annuity
rates in the 1990s, and that it is inappropriate to say it was negligent
therefore in not reaching the conclusion latterly reached by PwC and Equitable.

The case returned to court this morning as rumours of a settlement
circulated, with one media report suggesting that one party had attempted to
settle to avoid further embarrassment.

E&Y has argued that the directors would not have done what Equitable says
they should have done if they had been advised differently by E&Y, forcing
Equitable on to the back foot in relying on expert testimony.

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