The PwC – AIG Clusterschmuck

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See my previous comments on this unholy alliance here, here, here, here and here.
See my comments in the NYT on this article here.
How Bad Is It? AIG Can’t Tell
If someone wants to buy insurance against a risk, perhaps the insurance company should assume the risk is real.

American International Group shares are down sharply today, after the insurance company said its auditors at PricewaterhouseCoopers had concluded that it had a material weakness in its internal controls related to its estimate of the value of its credit default swap portfolio. It can’t quite figure out how big a writeoff to take in the fourth quarter, but it is going to be big.

A.I.G.’s explanation of all this is in an S.E.C. filing today. If you can understand the details of what they are saying, congratulations. I can’t.

But what it boils down to is this: A big, supposedly sophisticated insurance company took risks it did not completely understand, and now is scrambling…
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  1. re: The Auditors » Blog Archive » The Great American Financial Sandwich: AIG, PwC, and Goldman Sachs says:
    February 2, 2010 at 10:07 am

    […] gets reappointed as auditors, so that a few months later, they can tell AIG what a screw-up they’ve been. In my opinion, it’s too little too late.  But what’s really going on […]

  2. re: The Auditors » Blog Archive » PwC Tough On AIG? Too Little Too Late says:
    February 1, 2010 at 4:36 pm

    […] AIG’s acknowledgment of their exposure to writedowns in their derivatives portfolio came soon after their December disclosures that underestimated the losses. PwC, with their long, long relationship to AIG and the recent renewal of the relationship with the b… […]

  3. re: The Auditors » Blog Archive » WSJ Swallows Big 4 Public Relations says:
    January 26, 2010 at 12:12 pm

    […] is because the firms are tired of arguing with their clients and getting fired or resigning. Just look at Pwc and AIG. PwC is hanging on despite being sued by their client and being the one who presided over all of […]

  4. re: The Auditors » Blog Archive » They Weren’t There: Auditors And The Financial Crisis says:
    December 7, 2009 at 7:48 pm

    […] tough with AIG.” I called the actions by PwC “too little too late” and a clusterschmuck. Why was PwC still AIG’s auditor?  Afterall, they were being sued by AIG’s shareholders […]

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