PwC Once Again Faces Independence Problems

PricewaterhouseCoopers has been accused of signing off on erroneous financial statements of MicroStrategy Inc., a PwC audit client as well as supplier of software products that PwC sells to some of its other clients. The issue raises the auditor independence red flag at a time when all accounting firms are under scrutiny by the SEC for independence transgressions.

While accounting firms maintain that they can provide unbiased services to their clients, even while working as consultants and resellers for the clients and their products, there is widespread belief that auditor independence is being sacrificed when the relationships between auditor and client get too cozy.

There was a time when accounting firms provided accounting services, and that was all. As the desire to generate more revenue coupled with the desire to provide a greater array of professional services to their clients grew, accounting firms became less dependent on accounting as a source of revenue and more entrenched in general business consulting issues. Now, many large accounting firms are rethinking this mix and are taking measures to separate their consulting practices from their accounting practices by spinning off the consulting part of their business into a separate company.

Is it possible that the future will bring a return to accounting firms that provide nothing but accounting services?

See related story about SEC offering amnesty to independence violators.

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

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.