“The presentation of these financials (by PricewaterhouseCoopers) may be technically permissible but they are grossly misleading…
These accounts suggest, to the untrained financial eye, that the company is profitable and it is not.”
Excerpt from a reader’s analysis of PwC at Afra Raymond.com
PwC PricewaterhouseCoopers should be ashamed
Two days ago we directed our readers to a new Afra Raymond article about the CL Financial Scandal The CMMB story.
Today one of Afra’s audience left a devastating analysis of the activities of PwC PricewaterhouseCoopers in deliberately misleading investors into CMMB – Caribbean Money Market Brokers. Even though we just covered Afra’s new article, this latest comment says it all and deserves our attention.
People used to trust PwC. What fools we all were.
Without misleading, unethical auditors like PwC – willing to lie, deceive and be well paid for it – Duprey, Parris and David Thompson as their lawyer couldn’t have gotten away with what they did for so long.
Afra’s stories about the rot and fraud at CL Financial, Clico and the other scam companies have been going wild on the hit-meter because so many of us are victims, and will be victimized more as our tax dollars bail out the big guys and put the burden on the little people. The battle cry of crooks like Duprey and Parris: “Privatize profits, socialize losses.”
Here is what Afra’s reader observed about PricewaterhouseCoopers….
“Glad that you provided accounts Afra. Now we are not talking in a vacuum. The financial situation was a lot more dire than you suggest. Let’s look at the last three years. The “profit” reported on the income statement for 2007, 2008 and 2009 was $11m, $35m and $66m respectively. However, during the same time period there were $224m, $13m, and $275m respectively, of fair value losses on their investment portfolio (i.e increase in fair value reserves) that were passed through shareholders equity and did not hit the income statement (???).
The presentation of these financials may be technically permissible but they are grossly misleading. The general US practice with which I am familiar is to disclose these losses on the income statement.
These accounts suggests, to the untrained financial eye, that the company is profitable and it is not.
No financial analyst can examine an investment firm’s financials and not consider all portfolio losses when calculating the profit. Portfolio losses are in the ordinary course of business for an investment firm. Therefore the aggregate “profit” for the three year period 2007-2010 is not $112m but a loss of $400m after taking into account these losses. That is why you can have an absurdity like a profit of $66m in 2008 but equity declining by $210m.
So to sum Afra, CMMB did not have “a very low rate of profit”. They in fact incurred substantial losses. As always, keep up the good work.”