PwC’s controversial partner suspended

By : |August 11, 2003 0



NEW YORK: U.S. regulators on Monday said they barred the Pricewaterhouse Coopers partner, who led the audit of MicroStrategy Inc., the once high-flying software maker that was later forced to restate profits, from auditing public companies for at least two years.


The move by the U.S. Securities Exchange Commission settles charges of improper professional conduct by PwC partner Warren Martin, who was in charge of the audit of the tech company during the period that the accounting problems surfaced.


The settlement closes an episode in a well-publicized case that has hung over the world’s largest accounting firm for years. The MicroStrategy saga was one of the most prominent, accounting irregularity cases before the scandals at Enron and WorldCom burst on the scene and came to symbolize some of the accounting abuses during the giddy days of the Internet bubble.


McLean, Virginia-based Microstrategy, a Wall Street favorite during the Internet boom, restated its results for the three years from 1997 through 1999 for improperly recording revenue.


The restatement slashed revenue by about $66 million from the $365 million it had initially reported and triggered a 62 percent freefall in its stock price in one day, from a high of $333 per share in March 2000.


The SEC accused Martin of not developing enough evidence to back up how MicroStrategy recognized revenue and failing to properly consider the wording and dates in the company’s contracts, that conflicted with how it booked revenue.


Martin also did not properly look into concerns raised by his fellow PwC employees that should have alerted him to the audit problems and relied on information provided by MicroStrategy executives that were not investigated, the SEC said.


Martin can apply to practice before the SEC as an accountant again after two years, the SEC said.


© Reuters