PwC ruled negligent in Colonial Bank auditing case | Accounting Today

PwC ruled negligent in Colonial Bank auditing case | Accounting Today

In a ruling that exposes the Big Four firm to heavy potential damages, a federal judge found that PricewaterhouseCoopers was negligent in its audits of Colonial Bank, which failed in 2009 in the midst of the financial crisis.

The case involved a lawsuit by the Federal Deposit Insurance Corp., which sued the firm for failing to detect a multi-billion-dollar fraud against Colonial Bank and its parent Colonial BancGroup by Taylor, Bean & Whitaker Mortgage Corp., another financial firm that collapsed in 2009. The FDIC faulted PwC for letting Colonial account for certain transactions as sales of mortgages from Taylor Bean to Colonial, rather than as loans from Colonial to Taylor Bean that were secured by mortgages. Last year, PwC reached a confidential settlement with Taylor Bean’s bankruptcy trustee for an undisclosed sum (see PwC reaches settlement in Taylor Bean lawsuit).