Accounting giant fined $5m

The firm had avoided the taint of scandal

Accounting giant PricewaterhouseCoopers has been fined $5m by the US Securities and Exchange Commission (SEC) for improper auditing and violating standards of independence.

The firm, one of the so-called "Big Four" accountancy companies, agreed to the fine to settle charges dating from 1996 to 2001 that it provided financial consultancy services to clients that conflicted with the proper auditing of their accounts.

The news comes as another accounting firm, Andersen, is struggling for survival following its role in the collapse of US energy giant Enron, and the revelations that telecommunications giant WorldCom had massively overstated its profits.

PwC had previously managed to avoid much of the scandal currently rocking the US business world, however following the fine it has acknowledged it must tighten up its procedures.

'Culture of cosiness'

The charges related to 16 firms, including cosmetics manufacturing giant Avon, which, under Pricewaterhouse Coopers' direction, improperly accounted for $26m.

The fine is the latest scandal to hit US corporate culture

Avon's accounts have since had to be restated.

The SEC found that the accounting company "failed to exercise the objective and impartial judgment required by the independence rules", it said in a statement.

PwC has now agreed to a number of measures to ensure impartiality, including annual training of its auditors to ensure independence from its clients.

Although the firm's misdemeanour is not on the scale of such scandals as Enron and WorldCom, it shares similar attributes - getting too close to its clients and helping them to make their profits look better then they really were.

The BBC's North America business correspondent, Stephen Evans, says this latest example of improper auditing indicates there was a culture of cosiness between big companies and the auditors who were supposed to monitor them on behalf of the public.