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Auditors Anticipate NY Ruling on Malpractice Exposure

Tammy Whitehouse | September 13, 2010

The auditing profession is watching closely a hearing in New York Court of Appeals this week, expecting significant implications for auditor malpractice claims.

A group of investors in the reinsurance firm American International Group are suing the company’s audit firm, PricewaterhouseCoopers, for failing to detect a long-running bid-rigging and accounting fraud scheme at AIG. PwC won a dismissal of the suit contending AIG shared blame because it was AIG employees who carried out the fraud that PwC failed to identify, a common defense for audit firms against shareholder claims.

The investor group, led by the Teachers Retirement System of Louisiana and the City of New Orleans Employees’ Retirement System, appealed the dismissal and will have their day in the New York Court of Appeals this week. A ...

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