Audit Firm Settles $50 Million Class-Action Suit

In a case that illustrates what used to be common practice before Sarbanes-Oxley became law, Big Four accounting firm PricewaterhouseCoopers agreed to pay $50 million to settle a class action suit involving its former audit client Raytheon.

New York State Comptroller Alan Hevesi’s office issued a statement announcing the settlement agreement. Raytheon was accused of engaging in improper accounting techniques to cover up mounting losses, which later cost investors millions of dollars when the company’s true financial condition was revealed.

PwC was accused of looking the other way despite numerous red flags when it issued a clean audit opinion on Raytheon’s 1998 financial statements.

PwC’s independence was compromised when it went after a lucrative non-audit consulting contract from Raytheon just before it issued the clean opinion—a practice later limited by Sarbanes-Oxley, the Business Review of New York reported.

Earlier this month, Raytheon agreed to pay $410 million in cash and warrants to settle all claims against the company and its former top executives, the Business Review reported, adding the settlement is pending court approval.

Hevesi, who is the sole Trustee of the New York State Common Retirement Fund, is the court-appointed lead plaintiff in the class action lawsuit, which is pending before Judge Patti B. Saris in the U.S. District Court for the District of Massachusetts, the Business Review reported.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Upcoming CPE Webinars

Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.