By Michael Foster, Big4.com Blogger
Australian PwC partner Stephen Cougle will be banned from auditing for two and a half years. The decision is in response to his erroneous classification of $2.1 billion of debt when working on Centro’s financial accounts in 2006 and 2007.
Centro, an Australian retail conglomerate, has total assets of approximately AU$31 billion ($32.2 billion) and employs over 700 people in Australia. As one of the company’s most important retail large-cap firms, the company’s near collapse sent shockwaves in the Australian economy when it nearly collapsed due to a failure to restructure debt following the global financial crisis of 2007 and 2008. Part of that failure was a result of Cougle’s error.
Cougle had incorrectly classified AU$2.1 billion of debt as non-current when it was in fact current debt. This resulted in the firm being unable to restructure its debt and face near bankruptcy.
PwC will retain Cougle as a partner within the firm where he will work on “internal issues” although they acknowledge “there was a deficiency in the audit work undertaken for Centro in 2007.”
Shareholders of Centro’s stock suded PwC for $200 million in a class-action lawsuit. PwC has settled the suit, which named current and former directors at Centro as well as the Big4 firm.