One of Australia's largest accountancy firms, PricewaterhouseCoopers, has been accused of misleading or deceptive conduct over its audits of failed training college owner Vocation Limited.
PwC was last week named as a defendant in the class action brought against Vocation.
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The statement of claim against PwC makes serious allegations about the conduct of the firm and partner Steve Bourke during the audit of Vocation's 2014 financial statements.
A spokeswoman for PwC declined to comment on the matter as it was before the courts.
"We will be vigorously defending the allegations," she said.
She confirmed Mr Bourke was continuing to conduct audit work on ASX-listed companies.
Vocation was facing two major class actions brought by Maurice Blackburn and Slater and Gordon. Those two class actions were last week consolidated.
With the company in liquidation, there is thought to be little assets left in the company apart from directors and officers insurance. Naming PwC in the action gives investors to sue a more cashed up entity.
Vocation once sported a $400 million plus market capitalisation until its regulatory issues became apparent.
The company collapsed in late 2015 after its two largest colleges BAWMÂ and Aspin were stripped of their registrations and government funding for breaching teaching quality standards.
The company and three former directors including former Federal Education Minister John Dawkins are also facing civil action by the Australian Securities and Investments Commission over their alleged mis-management of the company. The directors deny the allegations.Â
The allegations against PwC include that the firm and Mr Bourke did not have reasonable grounds for the revenue representations in the accounts, that PwC and Mr Bourke failed to obtain sufficient audit evidence and failed to conduct the audit with reasonable care and skill.
The claim against PwC and Mr Bourke is in part based on the way the revenue of the business was audited in light of the funding issues with the government.
The claim alleges that "a reasonably competent auditor who was told that Vocation's management had agreed to repay the Department of Education $4 million would have had concerns that the remaining accrued but withheld revenue of $14.4 million would not be recovered from the Department."
"A reasonably competent professional auditor...would have caused the Victorian Funding Suspensions to be disclosed," it is alleged.
The class action against Vocation alleges the company misled investors by not disclosing in its prospectus that BAWM and Aspin had failed a federal audit of course quality and delivery.
It is also alleged Vocation was tardy in its disclosure to investors that its funding from the Victorian government had been cut. Â
PwC did not audit the prospectus and the allegations against Vocation regarding its non disclosure of its regulatory issues in its 2013 prospectus have not been levelled against PwC.
It's not the first time PwC has been drawn into a major class action.
The firm was a defendant in the class action brought against financially troubled shopping centre owner Centro in 2012.
That matter was settled for $200 million, which included a $60m contribution from PwC.Â
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