PracticeAuditEquitable problem a disclosure issue only, says PwC

Equitable problem a disclosure issue only, says PwC

Big Four firm on stand as Equitable expert witness also said that provisioning issues were only disclosure problems, court hears

The guaranteed annuity rate problem in Equitable Life’s accounts, for which
the mutual is suing former auditors Ernst & Young for £700m, was a
disclosure issue and nothing else, said PwC.

Key PwC partners are currently being cross-examined as part of the case, as
expert witnesses for Equitable. David Law and David Parmee have alleged in
witness testimony that E&Y should have qualified accounts that included
insufficient provisions for the liabilities.

At the same time as they were making those accusations, however, PwC’s audit
practice, which took over the Equitable audit in 2001, was taking a relaxed view
of provisions in Equitable’s accounts, it emerged in court today.

In an email, Gordon Ireland, a PwC audit partner, wrote to key officials at
Equitable Life: ‘In conclusion, taking the evidence of Chris Headdon’s letter to
FRRP the failure in the accounts was one of a lack of disclosure rather than
erroneous accounting.

‘In the circumstances and taking into account the views of Peter Nowell I
accept that it is not necessary to adjust the opening balance sheet in the
interim accounts.’

PwC had been asked to rule on the provisions as it had to sign off accounts
that included figures from previous years. E&Y is saying that its Big Four
rival has been hypocritical in its attitude to Equitable.

It also emerged today that PwC had erected Chinese walls in relation to the
case, between its auditors and the expert witnesses.

‘The reason why there was a Chinese wall is because it was clear within PwC
that PwC was doing two different things which are inconsistent and receiving a
large fee for both,’ said Jonathan Gaisman QC, for E&Y.

Related Articles

PwC replaces EY as Domino's auditor

Audit PwC replaces EY as Domino's auditor

5d Alia Shoaib, Reporter
The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

Audit The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

2w Carl Johnson, Stephensons
BDO holds off Big Four to retain top position as AIM auditor

Audit BDO holds off Big Four to retain top position as AIM auditor

2w Alia Shoaib, Reporter
FRC urged to fine Big Four firms penalties over £10m

Audit FRC urged to fine Big Four firms penalties over £10m

3w Alia Shoaib, Reporter
EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

1m Alia Shoaib, Reporter
KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

2m Emma Smith, Managing Editor
EY fined £1.8m over Tech Data audit

Accounting Standards EY fined £1.8m over Tech Data audit

2m Emma Smith, Managing Editor
Top 50+50: Firms post significant growth in new tax and audit rankings

Audit Top 50+50: Firms post significant growth in new tax and audit rankings

2m Emma Smith, Managing Editor