Last week the FDIC filed suit against Colonial Bank auditor PwC, and internal audit co-source vendor Crowe Horwath, for professional malpractice and breach of contract.
FORBES: A Tale of Two Lawsuits -- PricewaterhouseCoopers and Colonial Bank
Banking regulators and the bank's auditor, PricewaterhouseCoopers, were apparently deceived by the bank's software program, which kept the diverted deposits off the books.
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PricewaterhouseCoopers is auditor of Bank of America and also of Freddie Mac.
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It is the first time that an Irish bank has sued an ex-auditor over its conduct in the run-up to the financial crisis.
Lauren Tyler is still Chief Auditor of the whole bank.
FORBES: JP Morgan Chase Named A New Chief Auditor (For Corporate!); Can You Name Him?
This is the first FDIC suit against an auditor for financial crisis era bank frauds or failures.
FORBES: A Tale of Two Lawsuits -- PricewaterhouseCoopers and Colonial Bank
Deloitte is also the auditor for the Federal Reserve Bank, which is kind of ironic since it was supposedly preparing reports on behalf of one client, Standard Chartered Bank, to lie to another client, the Fed.
FORBES: Deloitte and Standard Chartered Bank: In Service To Profit Above All
Joe Evangelisti, chief bank spokesman, has now informed me, after this was published, that Pat Hurst is General Auditor for the Corporate division only, not the whole bank.
FORBES: JP Morgan Chase Named A New Chief Auditor (For Corporate!); Can You Name Him?
There was also no requirement for the auditor to give its opinion on whether the bank had fully corrected the material weakness in internal controls related to the valuation process until 2012 year-end.
FORBES: No Accounting For Auditor PwC At Levin's Whale Hearing
The bank simply certifies the accuracy and the completeness of the information submitted to the auditor and the auditor includes it in his financial report with the following gargantuan caveat: Because of the significance of the information that we did not audit, we are unable to, and do not, express an opinion on the accompanying financial statements and schedule taken as a whole (emphasis added).
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In similar fashion, in early January, when the country was still reeling from disastrous floods, the assembly quietly appointed a host of the president's nominees to head supposedly independent state institutions, ranging from the Supreme Court to the Central Bank, and including the ombudsman, the attorney-general and the comptroller (national auditor).
The failure of the Irish economy, for example, presided over by the auditors of Anglo Irish (EY, also auditor to Lehman), Allied Irish (KPMG), Irish Nationwide (KPMG) and the Bank of Ireland (PwC) has had a significant impact on the global financial system and global economy.
FORBES: Is PwC Conspiring To Evade Liability For Frauds In Iceland and India?
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