Pioneer Credit sues PwC for $32m in long-running accounting dispute

afr.com:

Pioneer Credit is suing PwC Australia for almost $32 million in losses and damage, the latest chapter in a long-running dispute between the listed debt collector and its former auditor over the way its financial assets were valued.

Pioneer Credit, which buys impaired books of consumer credit, announced it was taking legal action in the Supreme Court of Western Australia ahead of its annual meeting on Tuesday.

Pioneer Credit CEO Keith John.  Philip Gostelow

The company alleges PwC repeatedly advised it that it could continue reporting the value of its debt portfolios at “fair value through profit and loss” despite a change in accounting standards meaning the assets should be valued at “amortised cost”. “Amortised cost” is used by comparable companies around the world, but Pioneer alleges that PwC initially said it would not need to change its accounting treatment of its debt portfolios ahead of a change in the relevant accounting standard.

Pioneer alleges that before PwC changed its advice to the company relating to the new standard, the company made a series of decisions about how to manage its business and finances which led it to inadvertently breach one of its borrowing conditions, which cost it $27 million in losses and damages, plus another $4 million in interest.

Keith John, the company’s managing director, said the company was suing so that it could be “made whole from the damage we believe was caused by the firm”. He said Pioneer had been unable to resolve the situation with PwC “in a reasonable time frame and that’s led us to commence proceeding”.

PwC declined to comment on the legal action. In February 2019, PwC partner Douglas Craig took the unusual step of saying there was insufficient information available