New York (Aug. 14, 2003) -- The key PricewaterhouseCoopers partner who oversaw troubled toymaker Tyco International's books has been censured by federal regulators and can no longer audit public companies.
The Securities and Exchange Commission charged in a complaint that Richard P. Scalzo, 46, a PwC partner in Boston, fraudulently violated federal securities laws and behaved improperly on the engagement. Scalzo agreed to a settlement with the SEC, without admitting or denying the charges.
Last month, Tyco restated its financial results back to 1998 after admitting a range of bad accounting practices. PwC initially advised the company that the restatement wasn't necessary, but the SEC overruled the accounting firm.
While the SEC doesn't believe Scalzo intended to cover up improper accounting at Tyco, they do think he failed to heed warning signs that management was playing a financial numbers game and called him "reckless" for not performing a more thorough audit.
PwC spokesman David Nestor said the firm continues "to stand behind the work we did for Tyco and believe it was in accordance with professional standards in place at the time."
He added that the firm "supports and respects" Scalzo's decision to agree to the settlement, and confirmed that he remains a partner at the firm. Nestor said he did not know how long Scalzo has been a partner at PwC.
-- Tracey Miller-Segarra
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