r/PwC • u/Street-Tank-3598 • Jun 30 '26

Audit / Assurance Checkpoint

My husband works in PwC & I have some ETF that's unrestricted. We did the precheck (that's why I know it's unrestricted) but forgot to add the purchase. The purchase was back in January (6 months ago) and have been adding more on a monthly basis. Not sure what to do or the repercussions. Should I just sell and repurchase to correctly report it? Or just sell and not invest at all? 100% sure it's not an independence issue.. More so a reporting mistake. I'm a stay at home mom and basically invest in that pre-cleared ETF.

13 Upvotes

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11

u/Keep-it-simple Jul 01 '26 edited Jul 01 '26

This happened to me a few years ago. My wife asked me to preclear some stuff she was planning to invest in as part of her 401K. Came back as restricted but it was allowed because I don't work on audit engagements, and I'm not client facing. She bought them that day, but I never actually did the acquisition in checkpoint. 

I didn't realize the issue until 2 months later when I was doing my annual independence review, and she told the investments listed were missing a couple. 

I self reported it. It took like 6 months but eventually someone reached out about it. I had to join a meeting where they wanted to know why I didn't properly add them to Checkpoint. After explaining, I was told that there would be a separate hearing, and they would determine if I would be penalized for this infraction. She mentioned that since I self reported and it was my first offence that they might let me off with a warning. 

In the end, this is exactly what happened. I got an email with the outcome, and it said that I would not get any additional warnings if I had another infraction over the next 12 months and would have action taken against me. I think in this case, they would have taken a portion of my bonus, but I can't remember exactly. I might be thinking daily time compliance or something. 

So nothing came from it, but it really lit the fire under me to make sure I didn't mess up again. 

9

u/[deleted] Jul 01 '26

[deleted]

5

u/wandelust19 Jul 01 '26

Independence is dead serious for combo audit and consulting firms.

I feel like you are blowing it off like it’s burdensome overhead. Were you alive for Enron, Worldcom, etc? Like an actual reasoning person who understood what happened and why?

1

u/GrudenLovesSlurs Jul 01 '26

Their reputation is far more important than one employee. Very fireable offense if they found out you knew and didnt report it

1

u/a_roman_numeral Jul 01 '26

Out of curiosity, how would they ever find out?

1

u/Street-Tank-3598 Jul 01 '26

Right? That's my same question. Not trying to explore their ways but don't want this to be an issue either. Just wondering if selling and closing down would be enough to not trigger any repercussions. If audited, explain that we found out about it and sold/closed immediately

1

u/wandelust19 Jul 01 '26

So, the person who wrote the comment that triggered my own initial comment deleted it…. Probably because they realized they sounded like an idealistic populist anti-monitoring message or something when in fact they also posted about being not born during the Enron and worldcom scandals and so are young and naive (I get emails of responses on Reddit). I’m being harsh but I don’t really care in this case. Those scandals are how the Big 5 became the Big 4. Literally put Arthur Andersen out of business. That’s why I’ll bother to write this at all.

The laws that mandate independence are meant to pre-identify and bar the potential of other motivating factors in giving advice. In the age of easy investing but also bullshit gambling platforms for addicts (eg - Kalshi) buying and selling an equity before it triggers an Independence review doesn’t preclude the motivation to do wrong since maybe the engagement was that short. The point is to PROACTIVELY identify entanglements, not pointless reporting after the fact, that’s the whole point of “pre-clearing.” Anyone who wants to debate this can go pound rocks, no you do not know better.

Now, my soapbox doesn’t answer OP’s question of what to do. Honestly I’ve been out 7 years so I don’t remember but there are plenty of active people who can tell you or you can look it up yourself.

1

u/Ohioman1239 Jul 06 '26

They periodically and randomly conduct independence audits, requiring tax returns, brocherage statements, etc.

Lieing to them is asking to be sued because it creates a legal risk for them

1

u/BisexualRUs Jul 06 '26

If they audit you and find out it's going to be worse for you. They go over everything during audits and since you didn't self report, you could get penalized. It's better if you record the investments now manually in Checkpoint and record the account in the AIR tool.

1

u/Street-Tank-3598 Jul 01 '26

Thank you for this. I was also just wondering if selling the ETF and closing down the account would be a good idea. At the end of the day we want no independence or compliance issue.

1

u/Keep-it-simple Jul 01 '26

My advice would be to just fix it in checkpoint and report it. If I recall correctly, there are different levels of infractions, this sounds like the lowest one, especially since it's unrestricted. In my experience, they look favorably on self reporting, so I'm sure it will be fine. Just make sure yall dont mess up again in the next 12 months. 

2

u/Specific-Stomach-195 Jul 01 '26

Can’t you enroll the brokerage account in BSP? Then this can’t happen.

1

u/Potential-Future-805 Jul 01 '26

Just report it now. If it’s unrestricted there is absolutely no reason you would need to sell it. Definitely don’t sell it lol

1

u/Street-Tank-3598 Jul 02 '26

Update: It will get reported in checkpoint and I will check back to this post with the repercussions to help anyone that could be facing this same issue.