Behind the Veil



Though auditing’s built-in conflicts of interest may be obvious, they are seldom shown as clearly as in an internal PwC document Botta shared with the Project On Government Oversight. The document, dated May 2014, gave Botta feedback on his performance. It compiled comments from several PwC partners the firm had surveyed, showing in their anonymous words what it takes to become a PwC partner and how they expected PwC auditors to deal with clients.

The feedback included comments such as these:

“Build the relationships where the client would never want to leave PwC.”

“As a partner you have to have the position that you want these guys to like you . . . .”

“If he were really responsible for bringing in the revenue and keeping clients, as partners are, he would have to adapt fast.”

The May 2014 feedback survey suggested that the auditor needed the support of audit clients to advance at PwC.

“Until he gets the clients pounding the table for him, I don’t think he’ll ever make partner,” the survey said.

Under auditing rules, auditors are not supposed to do the accounting for their clients. That would amount to auditing their own work. Their job is to opine on the client’s work.

However, in his complaint to the SEC, Botta said that PwC frequently ends up doing clients’ work for them and fixing problems rather than disclosing them. He said that, to compensate for technology companies’ accounting weakness, auditors had assumed the role of advisors to management. Botta wrote that, at a PwC training session on documenting certain controls, a PwC sector leader said “we know that factually we have to manufacture most of the documentation because client [sic] don’t have it or don’t know how to do it or don’t want to spend the money to do it.”

The May 2014 feedback survey made similar points.

“[B]ecome a trusted advisor to the client,” the survey advised.

“When you get to be a partner they need someone to confide in and trust who will look out for you.”

In the survey, one partner recounted an episode in which Botta refused to prop up a client.

“Our client asked for help to do a write up,” the partner recounted. “A Partner would just get to work and write the memo and figure out how to conclude our opinion. Mauro would not give them the memo. His position was that it is not our responsibility to do that.”

(Botta told POGO the “write up” in question was apparently a technical memo the client was required to produce to support the way it accounted for a complex financial instrument.)

Auditors are supposed to be skeptical, and audits are supposed to be based on verification rather than trust. The May 2014 survey offered this feedback on Botta’s mindset and approach:

“I don’t think the way he develops his client relationships is very effective. He doesn’t trust any of his clients.”

“His core personality is being a really good auditor, but that doesn’t mean you can be a really good partner.”

In his complaint to the SEC, Botta said PwC had created an environment in which it was not safe to speak up. In the feedback survey, alluding to the highest score an employee could earn on a performance review, partners’ comments included the following:

“When you are a 1 rated top performer/partner, you tow the party line.”