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BT audit failings land PWC £1.75mln fine

Stock Markets Aug 08, 2022 13:40
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© Reuters. BT audit failings land PWC £1.75mln fine
 
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Big four accountant PwC has received a £2.5mln fine reduced to £1.75mln from the accountancy industry watchdog after a half-billion pound fraud was uncovered at a BT (LON:BT) subsidiary it had audited.

PwC and former partner Richard Hughes were sceptical enough about adjustments that were being made at the telco’s Italian arm, said the Financial Reporting Council (FRC).

BT eventually took a £513mln charge for the fraud comprising £268mln for corrections of previous errors and £245mln for changes to previous accounting estimates.

PwC also failed to gather sufficient audit evidence after discovering the fraud during its 2017 audit, said the FRC.

Hughes personally was fined £42,000, reduced from an original £60,000 after he cooperated with the audit watchdog and similar reasons were cited for the reduction in PWC’s fine, which admitted its failings in the BT audit and settled with the FRC.

Claudia Mortimore, deputy executive counsel, said: “The sanctions imposed in this case, where certain elements of the adjustments following a fraud were not subject to the required level of professional scepticism, underscore this message and will serve as a timely reminder to the profession”.

PwC added: “The FRC’s finding relates to a narrow element of the audit and the regulator has not found that the 2017 Financial Statements for BT were misstated, or that the sum of the BT Italy adjustments was wrong.”

“We have made significant investment in strengthening audit quality in recent years, which has been recognised in improved quality inspection results.”

Today’s fine is the latest in a string of hefty penalties levied on the giant UK accountants for audit failings.

This year alone, KPMG was fined a record £14.4mln for its part in the collapse of contractor Carillion with a further £3mln for its audit work on Conviviality, while PWC was fined £5mln for its audits of construction firms Galliford Try (LON:GFRD) and Kier.

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BT audit failings land PWC £1.75mln fine
 

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