UK Regulator Levels Largest Fine in its History at PwC

Chris Gaetano
Published Date:
Aug 17, 2017

The UK's Financial Reporting Council, which regulates the accounting profession in that country, leveled the largest fine in its history, $6.6 million (or, roughly, 5.1 million pounds), at Big Four firm PwC over misconduct during its audit of RSM Tenon Group, itself once the tenth largest audit firm in the UK. The regulator said that the firm's misconduct was "extensive" and comprised five separate admitted acts relating to: the accrual of bonus payments, certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts, the accounting for a lease, the assessment of the impairment of goodwill, and the calculation of goodwill in relation to a subsidiary. The Financial Times said that this misconduct allowed RSM Tenon Group to increase its pre-tax profits by 12.1 million pounds. 

Both PwC and Nicholas William Edward Boden, Senior Statutory Auditor and Audit Engagement Partner, admitted that their conduct fell significantly short of the standards reasonably to be expected of a Member and a Member Firm and that they failed to act in accordance with the Institute of Chartered Accountants in England and Wales's Fundamental Principle of Professional Competence and Due Care. 

PwC, in a statement, said that it is sorry that aspects of the audit carried out in 2011 fell short of professional standards, and added that it cooperated fully with the regulator during the investigation, and accepts its findings, said the Financial Times. It said that the firm continually reviews and updates its audit processes in response to both internal reviews and external inspection findings, noting that its annual Audit Quality Review shows year-on-year improvements. 

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