Herbalife Ltd. (NYSE:HLF) Director Jeff Dunn is confident of ‘clean’ results when PricewaterhouseCoopers LP completes its audit.

Herbalife

A fresh audit from PricewaterhouseCoopers has been initiated in May after KPMG indicated in April that its independence had been eroded and hence withdrew its audit reports for 2010, 2011 and 2012.

Bill Ackman’s allegations

Pershing Square founder Bill Ackman in his third quarter letter to investors claimed his company identified a substantial number of serious issues with Herbalife Ltd. (NYSE:HLF)’s accounting, disclosure, and tax policies, which Pershing brought to the attention of PWC and the SEC in a series of three letters delivered recently.

The letter further claimed that at a minimum, the Pershing Square fund wouldn’t be surprised if the re-audited financials provide further disclosures about Herbalife which will raise additional questions about its business practices and its previously reported results.

Herbalife director’s confidence

Jeff Dunn indicated in a telephone interview with Bloomberg yesterday that he has nothing that suggests anything is going to come out of the audit. He said that Herbalife Ltd. (NYSE:HLF) views the re-audit as an opportunity to have a full, clean set of eyes coming in and tearing it apart one more time.

Jeff Dunn reiterated that the audits are expected to be completed by the end of December. He hinted Herbalife Ltd. (NYSE:HLF) is open to using surplus cash to buy back its shares after the audit is completed.

Share buyback

During the quarter, Herbalife Ltd. (NYSE:HLF) stock price rose from approximately $45 to $70 per share, and from approximately $60 to $70 per share during the month of September alone. The stock price increase appears to have been driven by commentary from Tim Ramey, a perennially bullish Herbalife analyst from D.A. Davidson who indicated that after the audit exercise from PricewaterhouseCoopers is completed, Herbalife would launch a $2 billion investment grade bond issue at an interest rate of 4 percent, the proceeds of which would be used to fund a share repurchase at $75 per share.

During July, Herbalife Ltd. (NYSE:HLF)indicated the nutrition company would resume its plans to repurchase at least $50 million of stock per quarter, after it receives a clean bill of health on the new audits.

During his interview with Bloomberg, Dunn indicated Herbalife Ltd. (NYSE:HLF)’s stock is a good buy and if the company has any excess cash lying around and has leverage, it would put its money to work, which would be good for shareholders.