UK regulator to probe PwC
Britain’s accounting regulator will investigate audits by PricewaterhouseCoopers of BT Group after a scandal was uncovered in 2017 at the Italian operations of the group.
Britain’s accounting regulator will investigate audits by PricewaterhouseCoopers (PwC) of BT Group after a scandal was uncovered in 2017 at the Italian operations of the British telecommunications group.
BT lost a fifth of its value in January after a £530m writedown, partly due to financial irregularities that were found at the Italian division.
The Financial Reporting Council (FRC), which can fine auditing firms and accountants and ban individuals from the accountancy profession in England and Wales, said on Thursday it would investigate PwC’s audits from 2015 to 2017.
The FRC is now expected to gather evidence before drafting any formal complaint.
The council has open investigations into each of the “Big Four” global accounting firms, which include PwC. The four firms audit more than 95% of the biggest 350 London-listed companies, despite efforts to draw in new competitors.
BT filed a criminal complaint in Italy in April that accused several former executives and other staff of unlawful conduct.
Current and former staff said efforts to hide the Italian unit’s performance had gone on since at least 2013.
BT said in June it would drop PwC after an evaluation found “areas for improvement”. It said it would move to KPMG.
PwC said it would continue to co-operate with the FRC.
The regulator had a duty to investigate where it believed there was public interest and to give confidence to financial markets, PwC said.
“The FRC’s annual reviews of our audit work, policies and procedures show a continued trend of improvement in our work and we use the FRC’s insights, together with our own reviews, to continuously improve how we deliver highquality audits,” a spokesman from PwC said.
The regulator said it would conduct the inquiry in a “timely and robust manner” but declined to comment on whether it would investigate individuals employed by either PwC or BT alongside its investigation of PwC itself.
Such inquiries investigate how audits are planned and structured, whether auditors sufficiently challenged management and policies, whether significant risks were identified and if audits complied with international standards.
The Serious Fraud Office declined to comment on whether it planned a criminal investigation into BT.
THE COUNCIL HAS OPEN INVESTIGATIONS INTO EACH OF THE ‘BIG FOUR’ GLOBAL ACCOUNTING FIRMS