Maxwell - PwC says affair 'cost it dear'
PwC partner admits gravity of Maxwell affair and says audit procedures are improved.
PricewaterhouseCoopers managing partner Peter Hazell admitted this week the Maxwell affair had ‘cost the firm dear’ and had impacted on all partners and staff in one way or another.
Hazell emphasised the improvements Coopers & Lybrand, and subsequently PwC, had made to its audit procedures since the death of Robert Maxwell and the crash of his business empire in 1991.
These include the development of a specialist pension group, a system of independent review partners, more risk management, and the instillation among staff of a more sceptical approach towards audits. PwC still audits Mirror Group Newspapers.
Emphasising that the firm accepted the findings of the Joint Disciplinary Scheme and the penalty, Hazell said: ‘We fell short of the standards we should have had. All failures of its type are embarrassing to us.
‘The acid test is the client’s response. We believe we have done all the things we need to do to make sure this never happens again. Clients have expressed their support of the partners in question.’
John Cowling was the PwC partner most severely criticised by the JDS.
The central figure in the audit of Maxwell’s main companies and his private company, however, was senior audit partner John Walsh, who died in 1996. The JDS findings state that Walsh had trusted Maxwell, and this must inevitably have coloured the approach of his juniors. Brandon Gough, who retired in 1994, was senior partner at the time.
MAXWELL SCANDAL – HISTORY
1970 Coopers’ John Walsh appointed to audit Maxwell’s main companies
1973 DTI inspectors say Maxwell could not be trusted to exercise ‘proper stewardship’ of a publicly quoted company
1984 Maxwell buys Mirror Group
Resources & Whitepapers
Accounting Software The power of customisation in accounting systems
1990 Ill-fated audit of Maxwell’s main companies undertaken; Maxwell attempts to disguise financial collapse of empire using secret ‘loans’ from Mirror Group pension fund
1991 Receivers appointed to Maxwell’s personal estate
1995 Collapse of trial against Maxwell’s sons Kevin and Ian
1996 Walsh dies. Complaints against him dropped
1998 JDS reveals complaints against four Coopers’ partners for their 1990 audit of Maxwell’s empire
FUTURE Coopers still defending an action brought by Maxwell Communications liquidator, Grant Thornton.