Chile Forum

It looks like Price, Waterhouse, and Cooper has raft of charges being brought against them by the security exchange commission of Chile over the La Polar scandal. About time.

In their defense, I suspect this will turn out to be a lot like the Madoff situation. They sent in some low level local Chilean auditors from the Chile office that were easily impressed by the song and dance given them at La Polar, and simply signed off on whatever documents they were fed.

Unfortunately I can not post the link, because the El Mercurio web site wants registration. If anyone finds a clean link to an article about it, please post it.

admin wrote:It looks like Price, Waterhouse, and Cooper has raft of charges being brought against them by the security exchange commission of Chile over the La Polar scandal. About time.

In their defense, I suspect this will turn out to be a lot like the Madoff situation. They sent in some low level local Chilean auditors from the Chile office that were easily impressed by the song and dance given them at La Polar, and simply signed off on whatever documents they were fed.

Unfortunately I can not post the link, because the El Mercurio web site wants registration. If anyone finds a clean link to an article about it, please post it.

I have been audited by PWC and KPMG many times in different jobs i have had as a IT manager,

the only thing they do is conduct a interview, hardly any actual digging for dirt!!, so there audits are based purely on what i say, most of the time the person making the interview is some 24 year old out of uni who has no real experience.....

admin wrote:It looks like Price, Waterhouse, and Cooper has raft of charges being brought against them

That's what we suspected on the earlier open news about a month ago topic6156.html?hilit=polar

Parallel article with no subscription requirement http://www.elmostrador.cl/noticias/nego ... aterhouse/

I had a business partner years ago in the States that once worked as a bank examiner for the feds in the U.S.

He use to tell me stories of how the banks would do everything in their power to keep him away from the books. Plush cars to pick him up, offers for long dinners, anything to distract and delay him from conducting the audit.

I am sure in Chile the keep a competent auditor away from the books game is magnified many times, being Chile and all. Still, at the end of the day, PWC was responsible for doing a job, and sent incompetent or corruptible people to do it. The buck needs to stop with them, in a very very big way.

There is also the whole thing going around about how the consumer protection agency in the last government reported that La Polar and other companies where abusing the credit game, but no one in the prosecutor or other offices with authority to prosecute wanted to touch it.

I suspect a lot of it had to do with a left government that did not want to look like they were using their position of power to go after big business. A little too stereotypical left in other words to be politically comfortable.

Can I interject:

Enron and the death of the big 8 (6???), whatever.

Isn't it all kind of like the "bond company stooge" in the movie The Life Aquatic?

Price, Waterhouse and Cooper will probably shut down their offices in Chile and some global VP's in charge of Latin America will be canned. Their reputation is tarnished, current customers will switch to another accounting firm. What the net effect in the States will be over time, no clue. I would like to get John H take on this.
In regards to ISO certification, the standards, the procedures and the implementation were set by the parent company. Initially, they may have been grand-fathered in but as Andres points out, the problem may be with the agency that did the audits to verify compliance. A good auditor will ask a lot of questions to make sure you are in compliance with your own SOP's and documentation but most importantly will verify by performing random drill downs. ISO compliance companies are global and they prrobably all have a presence here in Chile. The problem here may be competence and the hiring process. Can't forget the pitutos...

We conduct financial audits occasionally of small companies, using our own contracted auditors (typically a small two man team is all that is needed) when clients are considering buying an existing business in Chile. So far every one of them has turned up serious irregularities. Those are relatively small companies though (e.g. tourism companies, fly fishing lodges) rather than public companies, and so it is not all that surprising there are irregularities and they are not hard to find because the company books are fairly simple. In most cases we are already advising the clients to buy the assets, not the business anyway. Mostly what we are after is identifying any sort of pending liability such as tax bills and so on that might have legal consequence later. The other time we might do it is some sort of breakup of a partnership, and we already know going in there are problems it is just a matter of figuring out how big. So we do audits, but it is more along the lines of one aspect of appraising the value of small businesses along with say the properties, cars, and so on.

So, you can get a good audit in Chile of a business, you just have to be careful to make sure who's team the auditors are really on. The small accounting firm we use, happens to be the father of one of our employees. We are fairly certain that his loyalties are with us and he has no connection to the business we have them audit.