PWC FACES DEEPER PROBE INTO BABCOCK AUDITS

THE accounting watchdog has expanded an investigation into PwC’s audits of Babcock International after the defence firm took writedowns.

The Financial Reporting Council (FRC) was already looking into the accountant’s work in 2017 and 2018 after spot checks found the quality was substandard.

But yesterday the FRC said it would also review the 2019 and 2020 audits.

Babcock boss David Lockwood kicked off an investigation into how profitable the company’s contracts were last year. The group, which repairs and maintains submarines for the Ministry of Defence, took a £1.7bn writedown after recalculating the value of takeovers made by the previous management, including search and rescue helicopter group Avincis.

The accounting industry has been under scrutiny ever since the sudden failure of contractor Carillion in 2018, whose books had been signed off by KPMG.

PwC is already under investigation for its work with collapsed mini-bond company London Capital and Finance and lender Wyelands Bank.