NU Online News Service, July 10, 12:17 p.m. – Weiss Ratings Inc., Palm Beach Gardens, Fla., a firm noted for its tough approach to rating the stability of life insurers and other financial services companies, says it found that auditing firms gave a clean bill of health to 94% of 33 public companies that were later accused of having accounting problems.

Only one auditing firm, PricewaterhouseCoopers L.L.P., New York, issued a “going concern” warning on any of the 33 companies, Weiss says.

PricewaterhouseCoopers audited seven of the companies and issued going-concern warnings for two, Weiss says.

Weiss also found that auditors gave clean audits to 42% of the 228 public companies that filed for bankruptcy between Jan. 1, 2001, and June 30, 2002.

Auditors issued going-concern warnings for 58% of the companies.

Ernst & Young L.L.P., New York, and PricewaterhouseCoopers, which audited 84 of the companies, had the best record of identifying failing companies. They both issued going-concern warnings for more than 60% of the companies that later filed for bankruptcy, Weiss says.

PricewaterhouseCoopers was the quickest of the Big Five accounting firms to issue going-concern warnings. When it issued warnings, it issued them an average of 245 days before the audited companies filed for bankruptcy. That compares with an average of 209 days for the other Big Five firms, and an average of 231 days for smaller accounting firms that audited public companies, Weiss says.