The Public Company Accounting Oversight Board has sanctioned a former partner of PricewaterhouseCoopers Auditores Independentes in Brazil for audit failures involving Sara Lee Corporation.
Wander Rodrigues Teles, the former lead partner for PwC Brazil's 2010 and 2011 audits of the Brazilian subsidiaries of Sara Lee, including Sara Lee Cafés do Brasil Ltd., was sanctioned for violations of PCAOB rules and standards. The PCAOB found Teles failed to adequately respond to signs that Sara Lee Cafés overstated its accounts receivable. In 2012, Sara Lee restated its 2010 and 2011 financial results, citing accounting irregularities in its Brazil operations, including inflated accounts receivable.
Teles consented to the PCAOB order, though without admitting or denying the findings.
According to the PCAOB’s settled disciplinary order, Teles knew a material amount of the accounts receivable was overdue and disputed by customers. He also knew the subsidiary was extending the due dates of its overdue receivables, indicating Sara Lee Cafés might have overstated accounts receivable.
Teles also failed to adequately respond to these risks with the proper care and professional skepticism, according to the PCAOB, and he failed to get enough evidence to support his audit conclusions.
Even though Teles did not admit or deny the findings in the settled order, he was censured, fined $10,000, and barred for two years from associating with a registered public accounting firm.
“Audit quality is a global issue,” said PCAOB chairman James R. Doty in a statement. “As this order demonstrates, the board is committed to investigating and disciplining auditors who present risks to investors in the U.S. markets, regardless of where the audit is conducted.”
PwC Brazil pointed out that Teles is no longer with the firm.
“Today’s settlement with the PCAOB details actions occurring six years ago by a former PwC partner who left the firm two years ago,” said a statement from PwC Brazil. “PwC Brazil is not a party to the settlement. PwC Brazil’s activities are governed by the highest standards and obligations, which we are committed to meeting. The quality and integrity of both our services and our people remain the foundation of our business as they have been for more than 100 years.”
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