PwC to Pay $182.9M for Coopers Audit
NYSSCPA.ORG News Staff
The Web Site For NY State Society Of CPAs
Posted October 3, 2005
NEW YORK -- PricewaterhouseCoopers (PwC) must pay $182.9 million to thousands of policyholders of Ambassador Insurance Co. for the failures of its predecessor Coopers & Lybrand, The Associated Press reported Monday.
In July, a federal jury found that Coopers & Lybrand was negligent in its audit of Ambassador 20 years ago, the AP reported. The jury awarded $119.9 million to Ambassador policyholders and other creditors, including the state of Vermont, where the company was headquartered; U.S. District Judge Harold A. Ackerman added $63 million in interest.
According to the AP, the jury assigned liability 60/40 between Arnold Chait, the Ambassador president accused by Vermont of mismanagement, and Coopers & Lybrand. Chait died about a decade ago and his estate is believed to have few assets, the AP noted, so Vermont asked Ackerman to find that PwC and the estate could each be considered fully responsible for the entire amount.
Ackerman agreed, noting that the jury accepted that the allegations against the audit firm were "inextricably intertwined with the conduct" of Ambassador's late president, according to the report. Coopers & Lybrand and Chait should have told the public as early as 1982 that Ambassador was insolvent, but instead worked to "create the illusion of a financially sound and growing corporation," according to the report.
PwC spokesman David L. Nestor told the AP that "the verdict and judgment are incorrect, and we will seek appeal if the trial court does not set them aside."