PCAOB Sanctions Former PricewaterhouseCoopers Brazil Partner for Audit Failures

The Public Company Accounting Oversight Board today announced sanctions against a former partner of PricewaterhouseCoopers Auditores Independentes in Brazil for audit failures and violations of PCAOB rules and standards.

Wander Rodrigues Teles was the lead partner for PwC Brazil's 2010 and 2011 audit work on the Brazilian subsidiaries of Sara Lee Corporation, including Sara Lee Cafés do Brasil Ltda.

The PCAOB found that Teles failed to adequately respond to indications that Sara Lee Cafés may have overstated its accounts receivable.

"Audit quality is a global issue," said PCAOB Chairman James R. Doty. "As this order demonstrates, the Board is committed to investigating and disciplining auditors who present risks to investors in the U.S. markets, regardless of where the audit is conducted."

In 2012, Sara Lee restated its 2010 and 2011 financial results, citing accounting irregularities in its Brazil operations, including the overstatement of accounts receivable.

According to the settled disciplinary order, Teles knew that a material amount of Sara Lee Cafés' accounts receivable was overdue and disputed by customers. He also was aware that the subsidiary was extending the due dates of overdue receivables, indicating that Sara Lee Cafés may have overstated its accounts receivable.

The PCAOB found that Teles failed to adequately respond to these risks with appropriate due care and professional skepticism, and failed to obtain sufficient evidence to support his audit conclusions.

"Faced with indications of possible material misstatements, the lead partner did not exercise appropriate professional skepticism," said Claudius B. Modesti, Director of PCAOB Enforcement and Investigations. "He repeatedly ignored information suggesting that the company's financial information was materially misstated."

In the settled order, Teles is censured, fined $10,000, and barred for two years from associating with a registered public accounting firm.

Teles did not admit to or deny the findings in the order.

PCAOB enforcement staff members Joshua Cutler, Carol Der Garry, and Hazel Mak led the investigation, which was supervised by Mark Adler and Marion Koenigs.

The PCAOB thanks the Dutch Authority for the Financial Markets for its assistance in this matter.

The PCAOB oversees auditors' compliance with the Sarbanes-Oxley Act, professional standards, and PCAOB and Securities and Exchange Commission rules. Further information about the PCAOB Division of Enforcement and Investigations is available on the PCAOB website. Firms or individuals wishing to report suspected misconduct by auditors, or to self-report possible misconduct, may use the resources in the PCAOB Tip & Referral Center.