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- Financials microcap Pioneer Credit (ASX:PNC) launches civil case against PwC in the Supreme Court of WA
- The company informed its shareholders that a writ of summons had been filed, summoning the accounting giant to court
- Pioneer is chasing PwC for losses it claims it incurred based on faulty advice from the big accounting firm
- The general thrust of the claim implies that Pioneer suffered both financially and in the sense of its reputation
- PNC shares last traded at 34 cents
Financials microcap Pioneer Credit (ASX:PNC) has launched a civil case against PricewaterhouseCoopers (PwC) in the Supreme Court of Western Australia
This morning, the company informed its shareholders that a writ of summons had been filed, summoning the accounting giant to court.
In short, Pioneer is chasing PwC for losses it claims it incurred based on faulty advice from the big accounting firm.
This advice resulted in Pioneer violating key financial covenants, leading to economic losses.
Technicality based case
The case hinges on a technical accounting standard, AASB 9.
Pioneer contends that PwC failed in its responsibilities as a top-tier advisory firm when it advised the company in December 2017 that it should adopt AASB 9.
According to Pioneer’s announcement today, PwC had informed Pioneer that it could “continue to classify and report the value of its purchased debt portfolios (PDPs) at fair value through profit or loss”.
PwC accused of shifting goalposts
Pioneer maintains PwC repeated this advice through to February 2019, when a PwC review of Pioneer’s 2H CY2018 report was completed.
Following this review, Pioneer states PwC changed its opinion and told the company “sufficient information was not available to determine whether Pioneer’s existing method of classifying PDPs was appropriate”.
In April of 2019, Pioneer alleges PwC then told the company it would need to classify and report its PDPs under a different method – effectively changing the goalposts on the field of financial advice.
Not enough time to act
“This occurred less than three months before the end of the reporting period in which Pioneer was first required to classify and report the value of its PDPs under AASB 9, and less than five months before it was required to provide its financial results for the year ending 30 June 2019,” Pioneer wrote today.
“If Pioneer had been aware from December 2017 that it was required to move to amortised cost, it could, with this knowledge, have conducted and managed its business and finances to avoid breaching its financial covenants.”
PNC Chairman Stephen Targett was blunt in his assessment of the accounting giant.
“The proceeding in essence alleges that PwC has failed the company and its shareholders,” he said.
The general thrust of the claim implies that Pioneer suffered both financially and in the sense of its reputation.
PNC shares last traded at 34 cents.
