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PwC's $5.8 mn UK fine strengthens demand to break up Big Four audit firms

This latest transgression adds to the scrutiny of PricewaterhouseCoopers, Deloitte, EY and KPMG, which together control more than 90% of UK audits for large companies

Hugo Miller | Bloomberg 

PWC
FILE PHOTO: The logo of accounting firm PwC | Photo: Reuters

was fined 4.55 million pounds ($5.8 million) by the U.K.’s accounting watchdog over failings in its handling of technology firm Plc, giving fresh ammunition to critics calling for a breakup of the so-called Big Four auditing firms.

The penalty was reduced from 6.5 million pounds after the company admitted its wrongdoing ahead of a final decision by the Financial Reporting Council. Two partners, Jaskamal Sarai and Arif Ahmad, were each fined a reduced 140,000 pounds after admitting breaches in the standards of their work, and were also given a “severe reprimand.”

The breaches were “numerous and in certain cases were of a basic and/or fundamental nature, evidencing a serious lack of competence in conducting the statutory audit work,” according to an FRC statement on Thursday.

This latest transgression adds to the scrutiny of PricewaterhouseCoopers, Deloitte, and KPMG, which together control more than 90% of UK audits for large The has urged a split of their operations amid allegations of conflicts of interest and a failure to spot a series of high-profile corporate failures including the wake of building contractor Carillion Plc.

The FRC’s sanctions follow an investigation that began more than two years ago into PwC’s handling of Redcentric’s financial statements for 2015 and 2016 after an initial review showed that had overstated its net assets and profits after tax by 20.8 million pounds.

“We are sorry that our work fell below the professional standards expected of us,” said in an emailed statement. The firm said it has taken numerous steps to strengthen processes and is investing 30 million pounds “to provide greater focus on the quality and public interest responsibilities of PwC’s statutory audit services.”

An outside spokesman for declined to comment.

First Published: Thu, June 13 2019. 16:10 IST
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