PricewaterhouseCoopers is yet to start its second review on IOOF more than five weeks after the company told the Australian Securities Exchange it had engaged the auditing house to "immediately commence" a review in to serious allegations of misconduct by a senior staff member.
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PwC partner Malcolm Shackell Monday told the Senate hearing into misconduct at IOOF that the auditing house had been "retained" by IOOF for a second review on the company but PwC was yet to formally commit to the review as it had not sent through an "engagement letter" to the company.
"We have not done the engagement letter," Mr Shackell said.
IOOF told the ASX on June 24 that it had engaged PwC for an immediate review that is due to be completed by end of August.
The review was commissioned after Fairfax Media revealed a senior staff member had allegedly engaged in front running, misrepresentation of performance figures and had asked junior staff to complete training and compliance exams on his behalf.
It is the second review that IOOF has commissioned from PwC. In December 2014, the auditing house was called in to review alleged front running and plagiarism by the staff member.
A copy of the first PwC report shows only two of the 13 allegations were investigated and the review scope was limited in a way that meant PwC were not allowed to interview the complainant, the person who was alleged to have done the wrong doing, or any member of the research team. Their emails, computers and other trading accounts were also not reviewed by PwC.
Mr Shackell defended his decision to conduct a review with such a narrow focus, saying PwC had acknowledged the limited scope of the review in its report and had asked to conduct further investigations.
Mr Shackell's testimony followed evidence given by IOOF chairman Roger Sexton, company secretary Danielle Corcoran and head of investigation Rob Urwin.
Mr Urwin told the Senate an investigation conducted by him found IOOF misrepresented the performance of a model share portfolio heavily promoted by the company in documents to clients and at presentations.
Dr Sexton told the Senate that while IOOF's the model share portfolio performance figures included errors, the figures were a legacy issue for the company.
He said that at least two former staff who had made complaints about the executive were not whistleblowers but rather employees who had complained about the executive.
Despite this, he said IOOF had recently changed its whistleblower policy.
"In August last year we upgraded our whistleblower policy. And we've also just changed it at our last board meeting so a whistleblower can direct to the chairman. Obviously we're learning from each experience and we've made changes," he said.
Earlier in the Senate hearing, the head of compliance at ASX Kevin Lewis threw doubt on a report IOOF said had been prepared for the company by King & Wood Mallesons that found no instance of front running had taken place at the financial services giant.
Mr Lewis told the hearing it was possible to front run by "ramping research" by giving forewarning of a research report recommendation to members of the market before it was released.