U.N. Audit: Consultant Contract of PwC Breaches Regulations

Lucas Gilmore, “Big 4″ observer
February 09, 2011 /

An audit report released by the UN’s Office of Internal Oversight Services has challenged the United Nation’s move to approve the multimillion-dollar consultant contract awarded to PricewaterhouseCoopers in a bid which it described as full of “serious breaches” against UN’s regulations.

According to the audit report, the UN procurement department and the project director for Umoja, UN’s computer system, have manipulated the awarding of the consultant contract during the bidding process. It said the involved parties have been biased towards PricewaterhouseCoopers whose bid for the contract was $5 million higher than the allotted budget for the Umoja project.

The project involves restructuring of UN’s procurement, human resources and financial management computer systems, to which UN has allocated $11 million.

The audit report also questions the procurement department and the project director for disregarding another bidder whose bid was $11 million, the lowest bid among others, compared with PricewaterhouseCoopers’s $16 million bid for the consultant contract.

The audit report added that it would be hard to identify the exact amount that UN would pay to PwC since the consultant contract did not specify the number of days the firm would render its services.

However, PricewaterhouseCoopers defended its position in the awarding of the consultant contract, saying the firm “complied with the U.N. procurement process and is not aware of any violations.”

Likewise, the procurement department and project director said the awards committee had reasonable discretion to grant the consultant contract to PwC, adding that to demand for the best final offer could hamper its capacity to negotiate with the most qualified bidder.

In a separate deal that involves the impending reappointment of PwC to audit the accounts of Tui, questions have been raised by the investor advisory group PIRC, citing the accounting error that had allegedly taken place during the time when it served as the firm’s outside auditor.

Late last month, PIRC has called on Tui investors to oppose the reappointment of PwC as a replacement of KPMG which chose not to seek another term as Tui’s auditor.

KPMG left Tui early in January following the discovery of an erroneous accounting report in October 2010 that forced the travel agency’s UK division to write off £117 million of its shares.

 

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