More than half of PwC’s 2,700 partners in the US were found to have breached the rules, many of the violations arising from investments or interests in audit clients of the firm.
The report concludes the sheer scale of the problem has its roots in ‘serious structural and cultural problems’ in the pre-merger firms.
Violation of the rules was not just among partners. At least 5% of PwC’s 36,000 professionals were found to be responsible for breaches.
The report summarises the result of an internal investigation commissioned by the SEC but supervised by an independent consultant.
Conclusions show 1,301 out of 2,698 partners self reported a violation of rules, with an average of five violations. 153 partners had more than ten breaches.In total there were 8,064 infractions over a two year period involving almost 2,000 individuals.
Violations included interests owned by family members as well as staff themselves.
Reasons for the magnitude of the problem vary but the report focuses on the fact that independence compliance was left to the initiative of individual staff members.
The report said: ‘This system failed, as PwC has acknowledged.’
PwC chairman, Nicholas Moore, and chief executive, James Shiro, have confessed in a letter to company partners that the report is ’embarrassing’.
But it claims that at no time was the objectivity or integrity of any PwC audit ‘compromised’, and that the massive number of breaches resulted, for the most part, from an ‘honest failure to appreciate the importance, failure to check the independence lists and a lack of understanding of the intricacies of the rules’.
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