Bean counter bust-up over sums debacle
AN embarrassing dispute is looming between two of the UK’S bestknown accountancy firms.
Troubled professional services group RSM Tenon was forced in February to restate its accounts after a review revealed ‘a number of significant errors and change in accounting policy,’ wiping £12.1m off its previously stated profits.
The firm is reported to have been advised by its lawyers, Reynolds Porter Chamberlain (RPC), that it may be able to seek damages from auditor PWC, which failed to spot the mistakes. In a further twist, PWC is also the auditor to Lloyds Banking Group, which as sole lender to Tenon is keeping the company afloat with a loan of £88m until the end of October. Tenon and RPC refused to comment and PWC did not respond to repeated calls.
Lloyds, which paid PWC a total of £36m last year, including £26.3m for audit and related services, is understood to be broadly supportive of Tenon’s management in its attempts to turn the firm around, but is not taking a stance on a possible legal case against PWC. The bank declined to comment.
The debacle – with one firm of bean counters getting its own accounts wrong and another accused of failing to notice – will fuel criticisms of the profession, which did not offer any warning of the financial crisis.
Tenon has seen its shares, down 0.05p to 8.44p, fall by 70pc in the past six months. It announced a loss of £70.6m in the second half of last year and admitted that if Lloyds does not provide new loan facilities at the end of October it cannot continue as a going concern. It parted company with its top two executives in January and drafted in new boss Chris Merry to sort out the mess.
PWC was recently fined a record £1.4m by the accountancy regulator after admitting its standards were called into question over the failure of bankers JP Morgan to segregate billions of pounds of clients’ assets from its own funds.