PwC’s CYA re: Northern Rock

PwC has started to draw the bright line on its involvement with Northern Rock by almost giving the bank a “going concern” qualification. As many of you know, that qualification is pretty much a death knell for any other kind of organization, causing companies to be in non-compliance with bank covenants and experience a credit and, therefore, a liquidity crisis. But as we know, liquidity crises never just happen overnight. There is always an underlying weakness that all have been unwilling or unable to acknowledge, including auditors.

But since the lender is the government, maybe it just doesn’t matter. Like with Bear Stearns. And Fannie Mae, Freddie Mac…

The company executives get away with plunder and so do the auditors who stood by, either by design or default, and watched it happen.

PwC red flags Northern Rock ‘uncertainty’
Rock auditor says disclosure in the troubled banks accounts do not provide adjustments which would have to be made if the bank collapsed

PricewaterhouseCoopers has raised concerns about Northern Rock’s interim report disclosures, warning that there was no guarantee the bank will be able to continue as a going concern unless a key approval is secured from Europe.

The troubled bank’s auditor did not qualify the bank’s half-year numbers, but said there was a ‘material uncertainty’ hanging over Northern Rock because the government’s £25bn bailout had not been endorsed by the European Commission…

PwC’s CYA re: Northern Rock

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