Overland hurls PwC auditors overboard
They said howwid things about our viability
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Overland Storage management seems to have taken exception to PricewaterhouseCoopers' auditing of its accounts and fired the firm.
For the past two financial years PwC has added a stern warning to the accounts, saying that there was substantial doubt about Overland's ability to continue as a going concern. While even accountants are entitled to a view about the state of the struggling business, Overland was upset because PwC didn't actually identify any specific factor in the accounts that led them to that conclusion.
Presumably PwC was expressing a view based on such business events as Overland avoiding running out of cash by factoring arrangements, repeated staff headcount reductions, Nasdaq delisting, declining revenues and losses. Overland's thinking is that, if so, it shouldn't have.
The upset was detailed in an 8-K SEC filing that said PwC had been dismissed on October 12. Overland stated that, during the period of the two financial years:
There were no disagreements between our company and PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to PwC’s satisfaction, would have caused PwC to make reference to the subject matter of the disagreement in connection with its report for such years; and there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
The subject matter of the disagreement was about Overland's ability to continue as a going concern. Overland now thinks PwC shouldn't have expressed such doubts without backing them up. It sent PwC a letter saying this and asking it to send a letter to the SEC saying whether or not it agreed with Overland's point.
Connoisseurs of brevity will appreciate PwC's SEC letter:
We have read the statements made by Overland Storage, Inc. (copy attached), which we understand will be filed with the Securities and Exchange Commission, pursuant to Item 4.01 of Form 8-K, as part of the Company’s Form 8-K report dated October 12, 2009. We agree with the statements concerning our Firm in such Form 8-K.
Moss Adams is replacing PwC, and might be wise to watch what it says. ®
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COMMENTS
glad they were honest
I for one am glad PwC was honest and stood by their statement even if it got them fired. It certainly seems like they aren't in very good shape. Recently bought a small tape library of theirs, not too concerned though, wasn't a big investment. Wouldn't deter me from buying others in the future. It seems Quantum is in a similar situation(maybe worse?).
Auditor
"Moss Adams is replacing PwC, and might be wise to watch what it says"
Arthur Andersen were careful what they said about Enron. It's unwise and often criminal.
Going Concern
I've been in lectures recently where the lecturer has flippantly joked about blanket going concern emphasis of matter paragraphs across the board in the current economic climate. Still, we've all seen what good a clean American audit report is worth in the past haven't we?
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