The U.S. audit industry regulator on Friday fined PricewaterhouseCoopers S.C., the global auditor’s Mexican firm, $100,000 for violating auditor independence rules in its relationship with Banco Santander Mexico BSMX, -0.57%, one of the largest financial services holding companies in Mexico. Auditor independence rules require a registered public accounting firm to be independent of its listed audit clients throughout the audit and professional engagement period. According to the Public Company Accounting Oversight Board, at least six of its partners had personal financial relationships with Banco Santander Mexico when PwC’s Mexico firm contracted to be the bank’s auditor for FY 2016. The six partners were located in the same office where the lead audit engagement partner for the bank’s audit primarily practiced and three of the six partners had obtained a margin loan or mortgage for a second residence from the client. Three other partners held uninsured assets in brokerage accounts with the bank or its affiliate. According to PwC’s records, none of the six partners have worked on the bank’s engagement. On July 20, 2017, and June 18, 2018, PwC Mexico signed engagement letters extending the engagement through fiscal years 2017 and 2018, respectively. Some of the prohibited relationships were discovered by PwC shortly after it signed up to audit the bank and unwound shortly after, but the brokerage relationships were not identified by PwC and were not unwound until approximately June 2018, according to the PCAOB.
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