PwC Reviews Non-Audit Service Work
The number one global firm is taking action in order to purge conflict where it might have a listed audit client to whom PricewaterhouseCoopers may also be acting in the capacity of actuary for the particular client’s pension scheme.
The review comes on the back of the 2009/2010 scrutiny of the firm’s audits and its policies by the industry watchdog, the Audit Inspection Unit, which discovered that in one listed audit, PwC was also the actuary to the group’s defined benefit pension scheme and performed the actuarial valuation for the scheme.
The AIU said that there was no consistency in these arrangements in regard to the underlying doctrines of the Ethical Standards, because of the governing actuary’s dependence on PwC’s valuation resulting into an unacceptable level of self review intimidation. The firm is identifying if there are any other listed audit patrons where PwC also work as actuary.
The unit called for making improvements in the revenue of audit, as it found that in most cases there is a tendency to focus on the balance sheet and presume that the work will cover up the income statement.
Locating the fact that in most cases of audits, the audit team was unsuccessful to spot revenue recognition as a significant risk, the recurring issues that still need improvement were brought into limelight holding up the firm’s audit team’s review of revenue recognition as an area that required more attention, this year.
The AIU said that the firm has now amended its policy, following further discussion with them at the time of inspection.
PwC, in its response said AIU often review the audits completed earlier than our receipt of the prior year’s AIU report as such impact of the actions not measureable until the next but one inspection.