In recent weeks the world is being reminded how military tension in faraway countries can effect us at our front doors. We have become a global village with economies that are interdependent. Some countries blessed with natural resources will negotiate the economic tempest without catastrophic fallout, others will be exposed as not very resilient.
How quickly we have forgotten the role international credit rating agencies played in the 2008 financial crisis. Analysts agree that mortgage-backed securities were given safe investment grade rating – the objective: to encourage highest profit making. The rest as they say is history with some countries like Barbados with opened economies unable to recover to pre-2008 economic performance.
The experience of the 2008 financial crisis emphasizes the importance of oversight bodies implementing robust, relevant governance infrastructure to minimize recurrence of seismic events of 2008. In Barbados we witnessed a local version of poor governance with corruption added to the mix which led to the collapse of CLICO. Many Barbadians have suffered immeasurably as a result, some crossing to the great beyond after losing lifelong investments and nest egg savings.
PwC Canada has been fined more than $900,000 by Canadian and US accounting regulators over exam cheating involving 1,100 of its auditors.
The watchdogs found that the Big Four firm failed to spot that staff were sharing answers in professional exams between 2016 and 2020 because of shortcomings in its internal standards and test supervision.
The Canadian Public Accountability Board fined PwC Canada C$200,000 while the US Public Company Accounting Oversight Board imposed a $750,000 penalty. The PCAOB, overseen by the Securities and Exchange Commission, has powers to sanction foreign accounting firms if they are licensed to carry out work for US clients.
FBN
This week another international PwC fined over exam cheating involving 1,100 of its auditorsnada Fined by US for ‘Widespread’ Cheating on Training story caught the eye. PwC Canada has agreed to pay $750,000 to US audit regulator after it was discovered over 1200 of PwC professionals shared or received answers to internal training tests. It makes the average person question the trust given to certifications and attestations issued by financial accounting houses who are responsible for shoring your confidence in the financial space.
PwC employees fined by US regulator represent the culture of that organization. The blogmaster will confidently opine PwC was caught in the dragnet this time around but the unethical behaviour probably exist elsewhere. One can only speculate the extent audit comments and management letters are compromised because of actors with questionable ethnics who represent oversight bodies such as the PwCs and others.
In Barbados we tend to avoid probing these kinds of issues as the CLICO episode exposed. Regulators being fined routinely has become a regular anyway. Not one day so far.
The blogmaster invites you to join the discussion.