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Surprising PwC Luxembourg : a recent press release that raises a couple of questions

PwC Luxembourg the day before yesterday published an interesting press release that wants commenting.

The Timing

Why this press release mid October as 2007 is not completed. There may be a link with the poor governance that is demonstrated in public and official sources, so is demonstrated that Pwc ethical commitments are not credible. For instance, PWC Ethics leader states on their website : "We have a very stringent Risk and Quality programme in place. We seek to assess every client assignment before we take it on, including, to the best of our ability, the quality and integrity of a company and its management. We also seek to review our clients every year to determine whether we want to continue serving them. If necessary, we decline assignments or resign from clients.". This statement is true for audit assignments and advisory assignments as well.

But in Luxembourg, not telling the truth at the tribunal about the shareholders (for something easy to check !), hiring and supporting dishonest employees while communicating on integrity (« Integrity defines our business, our company, our people, the information we process and the words we use. Our Professionalism is at work every day striving for excellence to exceed your expectations ») are evidences of " the quality and integrity of a company and its management" that PwC is proud to serve in assignments and/or to join in projects like the one to develop CSR (Corporate Social Responsibility) in Luxembourg.

The title of the press release

There is an inappropriate wording that emphasizes that the certification of accounts is a commercial relationship as it is sold to clients. When the auditor is not rigorous, the credibility of its audits is definitely weakened, which is a threat for the reputation of the client.
The threat is all the more actual as the wording of this title involves the clients which underlines that legal audits are definitely pure business. This feeling is corroborated by the second paragraph that states the progress of the business (+ 20%). I find it inappropriate that an audit firm should communicate on the progress of its business all the more than the "code of conduct" is not credible.
As far as consulting activities are concerned the threat is not the same for the reputation of the clients. Nevertheless there may be a doubt on the quality of the assignments.

Keywords in the press release

Finally some keywords for an audit firm, especially the leader, in a financial center are missing : ethics, deontology, aml... but it is true that such words are not compatible with an emphasized commercial relationship with auditees or clients. In this perspective this is honest to give up such communication that is a charade.
On the opposite a couple of words are interesting :
- The word "trust" is used (quoted twice) so is used the word confidence (quoted 3 times) : this idea is the cornerstone (the word is quoted as well) of this press release. It is amazing to think that the company that did not tell the truth at the tribunal about its shareholders, or hired and supported a non competent and dishonest CFO (by the way Pwc's former Financial Director who stayed a couple of years at this position just before) and has strong links with PwC communicated at the time of this CFO the motto "build trust". Therefore what is trust ? Furthermore is the word "confidence" relevant for auditors from their clients? I don't think so. This could mean that the client may trust the auditor to condone issues.
- Another word is quoted : growth (quoted 8 times). I find it dangerous that an audit firm should communicate on its growth rather than on its deontology for the job. Furthermore this is another common point with the company quoted above whose motto was "steady sustained growth" at the time of the famous CFO.
One must never forget that many companies involved in scandals very often communicate on this value of growth. For instance Enron, it lawyers and Enron's banks stated that "No other company offered such impressive sustainable growth" . Having growth for value means pressure for figures and therefore risky behaviours.

In a nutshell the leader PwC Luxembourg is admitting in this press release that auditees buy the audit (I am not saying the auditor) in Luxembourg and are happy with PwC whose business is growing in Luxembourg. QED

What is absolutely crazy is that they do not realize that the small size of the country (2500 km2) amplifies dysfunctions and negligence that are not acceptable from a leader whose brand did so much for the audit profession (Cf. Coso report, annual Global Economic Crime Survey)

By the way the recent Global Economic Crime Survey curiously ignores what's going on in Luxembourg one of the major financial Center in Europe with arround 16% of the offshore assets (but analyzes the UK - around 14% of the offshore assets - and Switzerland - around 14% of the offshore assets - in a country supplement)

Why ?

See press release
Annual Review

09:50 Posted in Luxembourg | Permalink | Comments (0)

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