A former PwC auditor alleges that the big accounting firm fired him in retaliation for standing up to fraudulent auditing practices in Silicon Valley and for filing a whistleblower complaint with the government, the Project On Government Oversight reports.
Mauro Botta, a former PwC senior manager, alleges in a recently filed lawsuit that the firm—also known as PricewaterhouseCoopers—fired him because he filed a confidential complaint with the Securities and Exchange Commission (SEC) about “fraudulent” and “deceptive” practices at the accounting firm. His allegations focus on PwC audits of Silicon Valley companies.
Botta’s 2016 SEC complaint, obtained by POGO, stated that PwC’s management culture encouraged auditors to pull punches when auditing, downplaying serious concerns about lapses in internal controls at Silicon Valley companies. Botta alleges that PwC improperly does clients’ accounting work for them and fixes problems rather than disclosing them, essentially letting auditors assume the role of adviser rather than skeptic. The result, he alleges, is that the public is left in the dark about problems at companies.
While at PwC, Botta became concerned about “the risk of collusion between auditors and management in this valley… with management paying us the fees and auditors picking and choosing what to call an audit issue,” his SEC complaint says.
In the complaint he filed with the SEC, Botta describes PwC as having gotten too cozy with companies it was auditing. In an internal PwC document, POGO reports, Botta was told that, as a partner in the firm, “…you have to have the position that you want these guys to like you….” The internal document goes on to say, “If he [Botta] were really responsible for bringing in the revenue and keeping clients, as partners are, he would have to adapt fast.”
Auditors like PwC are supposed to serve as independent watchdogs, protecting the investing public. Since the 1930s, the government has required publicly traded companies to obtain outside audits by independent firms.
Yet, “time and again, from the savings and loan crisis to the dotcom bubble, from Enron and WorldCom to the mortgage meltdown, the financial crisis, and countless other corporate scandals, accounting watchdogs helped lull the public into a false sense of security,” wrote David Hilzenrath, POGO’s chief investigative reporter. “If Botta’s take on auditing in Silicon Valley is on the mark, it’s another in a history of reasons to doubt the auditors and the federal system charged with protecting investors.”