Source: accountancy age.com 2 January 2018
PwC auditors were negligent as they failed to detect over $2bn fraud at Alabama’s Colonial Bank which led to its collapse in 2009, according to a US federal judge.
The Federal Deposit Insurance Corporation (FDIC) incurred a cost of $2.8bn after Colonial’s collapse and brought a professional negligence claim against PwC.
US district judge Barbara Jacobs Rothstein said that as auditor of parent company Colonial BancGroup, PwC failed to perform adequate checks and could have done more to prevent the bank’s collapse. The firm failed to respond to red flags and the judge will now consider whether PwC should be liable for damages.