JP Morgan's golden egg vs Maxwell's silver hammer
Posted by Christie Malry on January 13, 2012 at 10:00 am
Accountancy Age reports, in relation to the fine handed down to pwc for failing to report client money failings at its client JP Morgan:
The fine [of £1.4 million], issued by the Financial Reporting Council's disciplinary arm the Accounting and Actuarial Discipline Board (AADB), trumps the £1.2m fine issued to PwC predecessor firm Coopers and Lybrand for its audit work of Robert Maxwell's businesses.
It doesn't say whether the amounts are adjusted for inflation. I suspect they're not, meaning that the Maxwell figure is actually still higher.
But it bloody well should be. In his case you had what amounted to the wholesale looting of the company and considerable amounts of fraud. No, it's not the auditor's job to detect fraud, but they can't legitimately do nothing when the fraud is so flagrant and widespread.
So why penalise pwc so heavily over client money abuses, where it hasn't been shown that anyone lost money, while a not dissimilar sum was levied over Maxwell? Does the AADB just fancy a bit of extra money? Where do the fines go? Perhaps this heralds an era of higher fines, which must also mean higher fees. Investors, ultimately, will pay for it all.
I've not been following this one, but isn't a higher level of care expected from actual client money (where it's held on trust, or something similar) rather than the company's money?
Yes the company's money comes from the shareholders, but they own the company, not its assets. It's not "their money" in the same way that client money held by a bank is.