PWC TO SETTLE AIG SUIT FOR $97.5 MILLIONColumbus, Ohio - PricewaterhouseCoopers has agreed to pay $97.5 million as a partial settlement of a securities class-action lawsuit over the firm's audits of AIG, the insurance giant taken over in September by the federal government.
The Ohio Attorney General's Office announced the settlement after prosecuting the case on behalf of three local retirement plans.
The class-action complaint alleged that PwC violated the securities laws by issuing unqualified audit opinions on American International Group's financial statements during the years at issue in the case, 1999 to 2005. The plaintiffs also claimed that AIG improperly accounted for reinsurance and other transactions that led to the company's $3.9 billion restatement in May 2005. PwC did not respond to a request for comment.
The settlement must still be approved by the U.S. District Court for the Southern District of New York.
Separately, the firm reported that total gross revenues for its worldwide network rose to $28.2 billion for the fiscal year ended June 1, 2008, an 8 or 14 percent increase, depending on exchange rates. Growth in the advisory business rose 14 percent to $6.9 billion, while revenues from tax operations increased 13 percent to $7.5 billion. Meanwhile, PwC's assurance practice was up 3 percent to $13.8 billion.
STANDARD-SETTERS RESPOND TO CRISIS
London - The International Accounting Standards Board said that it is taking steps in conjunction with the U.S.'s Financial Accounting Standards Board to address the crisis in the credit markets.
The IASB said that it recognizes the need to clarify International Financial Reporting Standards to address market developments. It plans to work with FASB on developing a common approach to the valuation of assets that could be purchased under the Treasury Department's financial rescue plan, which Congress approved in early October.
The IASB noted that U.S. GAAP permits entities, "in rare circumstances," to reclassify financial instruments in the form of securities from their trading portfolios (measured at fair value with changes through the income statement) to "held to maturity" (measured at amortized cost and subject to testing for impairment). The IASB also noted that U.S. GAAP permits some loans that are not securities to be transferred from "held for sale" (measured at the lower of cost or market with changes through the income statement) to "held for investment" (measured at amortized cost and subject to testing for impairment). Provisions aimed at counteracting abuse apply to these reclassifications.
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