Accounting giant PricewaterhouseCoopers has agreed to a $54.5 million settlement in a case that charged it and other major accounting firms overbilled clients for travel expenses, Arkansas court officials said on Monday.
The settlement represents the latest blemish on the accounting industry hit hard by the collapse of Andersen and a series of corporate scandals over the past two years.
Other major firms, including Big Four rivals Ernst & Young , and KPMG , as well as consulting companies BearingPoint Inc. and Cap Gemini Ernst & Young face suits in the same case in state and federal court on charges of padding travel expenses by hundreds of millions of dollars for about 10 years.
Judge Kirk Johnson accepted the settlement in the suit that was brought with shopping mall operator Warmack-Muskogee as the lead plaintiff. “The court finds that the proposed settlement is fair, just, reasonable and adequate,” Johnson wrote.
According to court papers, the plaintiffs charged that the accounting and consulting firms were able to receive discounts of up to 50 percent on their travel and hotel expenses from travel agents, yet they billed clients the pre-discount price for the expenses.
“For more than a decade, the defendants have defrauded and deceived their clients and befouled ethical and professional standards in connection with their billing of 'costs' to their clients,” the plaintiffs said in documents that had been under court seal.
A spokesman for PricewaterhouseCoopers said the company had suspended the travel billing practices that were the subject of the case before any lawsuits had been filed.
“We are pleased to settle this matter and we consider it a fair and reasonable outcome for all of the parties,” the spokesman said.