PwC Forged the books to avoid taxes


Just a day after the PM announced a new agency to check the misdeeds of Chartered Accountants, PwC the auditing giant of India have been drawn to the court of laws for manipulating the books of accounts.

Ex-Chief Financial Officer of PricewaterHouseCoopers Private Limited (PwCPL), Sarvesh Mathur filed a complaint against the firm in the court of laws. He alleged that the Chairman of the firm helped him to adjust Rs. 5 crores outside the system, whereas the previous chairman backdated the invoices of Rs.93 crores by an accounting year to evade the impact of taxes.

Sarvesh Mathur is not the first person to raise this issue. Justice A P Shah also raised the same issue before few days when he said that violations by PwC member firms in India represents only the tip of the ice-berg and if left un-addressed will pose serious threats to public interest and national security. In his letter to the Prime Minister, Justice Shah had questioned PwC’s integrity and competence to render audit and advisory services to clients, including the government.


Violation by Mendoza, Berger & Company,

RFID Card Frauds

Public Company Accounting Oversight Board barred Henry Mendoza from being associated person of registered public accounting firm.

The Board found that Mendoza, the managing partner of the formerly registered firm Mendoza, Berger & Company, LLP, failed to cooperate in a Board inspection and in a Board investigation in violation of PCAOB rules. The Board also found that Mendoza violated PCAOB auditing standards related to audit documentation. According to the Board’s order, when Mendoza learned of an upcoming Board inspection, he announced in a firm-wide meeting that the work papers for the relevant audits needed to be “cleaned up” prior to the inspectors’ arrival. He instructed staff members to fill out audit programs that had not been completed at the time of the audit and directed changes to work papers, including backdating them to the time of the audit. Mendoza did not advise Board inspectors of the changes to the work papers and did not comply with standards for documenting the changes.

Later, after the Board commenced an informal inquiry, Mendoza directed additional modifications to work papers, including backdating them. These documents were provided to the Board’s Division of Enforcement and Investigations during the informal inquiry and then again after the Board commenced a formal investigation of the firm. Again, Mendoza did not inform the Board’s staff of the changes or comply with standards for documenting the changes.

Violations by Dean Dorton Allen Ford

auditor integrity

Public Company Accounting Oversight board imposed civil penalty on the Public Accounting firm for violating the auditor independence rules.

Dean Dorton Allan Ford (DDAF) prepared the financial statements for a broker-dealer audit client for the year ended December 31, 2012. As a result, the Firm was not independent of the Broker-Dealer under auditor independence criteria established by the Securities Exchange Commission and made applicable by Exchange Act Rule 17a-5(f)(3) to audits of brokers and dealers.

The Firm nevertheless audited the financial statements and issued an audit report that the Broker-Dealer included with the financial statements it filed with the Commission. In the audit report, the Firm represented that the audit had been performed in accordance with Generally Accepted Auditing Standards (“GAAS”).

Because GAAS requires independence, however, that representation violated Rule 17a-5(i), which required the audit report to state whether the audit was made in accordance with GAAS