The National Bank of Ukraine has put out a statement saying it has removed PwC from the register of accounting firms authorised to audit banks, because of ‘misrepresented financial information’ in the audit of CB Privatbank, the largest commercial bank in the country, resulting in a $5.5bn (£4.2bn) ‘black hole’ in the balance sheet
The central bank’s statement said: ‘The rationale behind this decision was PricewaterhouseCoopers Audit LLC’s verification of misrepresented financial information in the financial statements of CB Privatbank PJSC. In particular, this concerns information on credit exposure and regulatory capital reported by the bank.
‘The audit findings by PricewaterhouseCoopers Audit LLC failed to highlight risks faced by Privatbank PJSC, which led to the bank being declared insolvent and nationalized, with substantial recapitalization costs borne by the state.’
The decision was taken by the National Bank of Ukraine board upon the recommendation from the committee on the audit of Ukrainian banks. In 2015-2016, the NBU barred nine accounting firms from auditing banks for audit policy violations.
PwC audited Privatbank from the mid-1990s until it was nationalised late in 2016.
In a statement, PwC Ukraine said: 'We are very disappointed that the National Bank of Ukraine (NBU) has made a decision to remove PwC Ukraine from the list of statutory auditors of Ukrainian banks in relation to the audit of PrivatBank. We do not believe that the reasons given by the NBU justify its decision. We will examine all options for reversing this decision.
'We remain committed to the Ukrainian market and to serving our clients in Ukraine across all our lines of business.
'In PrivatBank’s 2016 financial statements, the new management made no adjustment to any figures relating to 2015, including the value of loans or collateral, or in the disclosure of related parties or regulatory capital. The 2016 financial statements also show that the events which took place after we signed the 2015 accounts may have had a significant impact on PrivatBank’s financial status.'