PwC ensnared in backdating controversy

The plight of Gary Gerhardt, former CFO of Engineered Support Systems, is a cautionary one for anyone in the compliance arena. Is informing your auditor, in this case PricewaterhouseCoopers, enough? Gerhardt says he told his audit firm that options granted to executives were backdated so as to be "in the money." Therefore, the firm and he should rescind Gerhardt's criminal indictment, he argues. This is an interesting question, and an old one. Who bears the brunt if the practice has been okayed by an audit firm? A reasonable executive would think he has the greenlight in most cases. In this case, the issue may not be that simple. There was other questionable activity that prosecutors have identified. Of course, just because an audit firm knows doesn't mean investors know. Still, there are areas of the audit firm-company relationship that are very tricky to say the least.

For more:
- here's the article from cfo.com