The big four


PwC finds accounting fraud at Steinhoff

Steinhoff, a South African furniture and household goods retailer, has been found by PwC to have fictitious transactions totalling US$7.4 billion between the financial years of 2009 and 2017, according to the Steinhoff company website. The firm found that the transactions, made by a small group of former top executives and outsiders, inflated earning and asset values which led to increased profits. In December 2017, South Africa’s audit regulator announced a probe into Deloitte, which has audited Steinhoff for almost 20 years. The scandal has led to Steinhoff’s market value losing 216 billion rand (HK$117 billion) since 2017, and several resignations including chief executive officer Markus Jooste, who denies any wrongdoing. Steinhoff said it would fully cooperate with any criminal investigations, and pursue claims against those responsible for fraud.

Levi’s goes public for the second time

Levi Strauss launched its initial public offering (IPO) on the New York Stock Exchange on 20 March, valuing the company at US$6.6 billion. It marked the jean maker’s return to the stock market after 34 years. The public offering raised US$623 million through the sale of 36.7 million shares at US$17 apiece, higher than the price range of US$14 to US$16 previously set by the company. The San Francisco-based blue jeans inventor first went public in 1971 before being privatized in 1985 after profits and its share price fell. The company, which began trading under the symbol “LEVI,” joins a string of high-profile IPOs hitting United States markets this year. Traders donned denim jackets and jeans, breaking the no-jeans dress code at the New York Stock Exchange on opening day. The company said it will use its share of the IPO proceeds for general corporate purposes, including potential acquisitions.

EY replaces KPMG as Aston Martin auditor

Aston Martin announced this month the appointment of EY as its auditor, after KPMG declined to reapply for tender less than three months after the company made its debut on the London Stock Exchange. EY will take over the audit of Aston Martin Lagonda Global Holdings plc for the financial year ending 31 December 2019. According to Sky News, the tender process was part of the group’s ongoing corporate governance procedures and does not reflect any dissatisfaction with KPMG’s work. Richard Solomons, Chair of the Aston Martin Audit and Risk Committee, said: “On behalf of the board I would like to thank KPMG for their service over the past 12 years as auditor to the Aston Martin Lagonda group since 2007, as well as their support for the IPO last year.”

Forensics helped reveal college scandal

Forensic accountants at the United States Federal Bureau of Investigation helped uncover the details of the college admission cheating scandal, which has seen more than 50 people – 33 of them Hollywood celebrities and athletic coaches – charged in connection with the case. The parents are accused of paying more than US$25 million between 2011 and 2018 to college admissions consultant William “Rick” Singer, who used part of the money to inflate student test scores and bribe college officials. Dr. Jennifer Stevens, Assistant Professor of Accountancy at the Ohio University School of Accountancy said: “[Forensic accountants] have played a huge role in the indictments. What the investigators would have done is trace the funds from the illegal entities to the people and vice versa, for the bribes and payments.” 

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