US-based Vencor, which announced it had emerged from chapter 11 bankruptcy protection on Friday, said it was told by PwC the provision of some non-audit services by a subsidiary of the Big Five firm had raised an independence issue.
The SEC originally launched its crusade to ensure auditor independence under former chairman Arthur Levitt. The US watchdog said it was doing so to safeguard investor confidence in financial reporting and re-assert the ‘perceived’ skewed balance between managing an audit business and marketing non-audit services.
A prolonged debate ensued which concluded with the announcement of proposals last year to tighten the rules on the amount of consultancy and other non-audit work large accountancy firms can offer audit clients.
According to reports, in this instance, it was PwC which informed the SEC of the situation. A spokesperson for the firm’s US practice declined to comment on client issues or whether the firm was under investigation. The SEC has yet to issue a statement on the case.
But Vencor, an operator of nursing homes and hospitals, said PwC intends to continue to be independent accountants but that it could not predict how the issue would be resolved or what impact it would have on the company’s past or future filings with the SEC.
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