PwC has been fined a record £5.1m by the UK’s accounting watchdog for “misconduct” relating to the audit of RSM Tenon, a professional services firm put into administration in 2013.
The Financial Reporting Council said it had issued PwC with a “severe reprimand” and an initial penalty of £6m, reduced to a £5.1m following a settlement discount. The fine is the largest ever issued by the FRC.
The watchdog also imposed a fine of £114,750 on Nicholas Boden, a PwC audit engagement partner, in relation to the collapsed group.
The sanctions related to “extensive” misconduct, the FRC said, with five separate instances in the RSM Tenon audit in the financial year to the end of June 2011 highlighted by the regulator. These included misconduct around the accrual of bonus payments, determining amounts recoverable on contracts, the accounting for a lease and the calculation of goodwill of a subsidiary.
The ruling is the latest in a string of actions taken by the UK watchdog against PwC and its “big four” rival as part of its push to drive up audit quality.
In 2013, RSM Tenon, then the UK’s tenth biggest auditor by income fee and listed on the FTSE SmallCap index, was put into administration and sold to accountancy rival Baker Tilly after acquisitions left it saddled with heavy debts.
“The admitted acts of misconduct include failures to obtain sufficient appropriate audit evidence and failures to exercise sufficient professional scepticism,” the FRC said on Wednesday.
Proceedings against RSM Tenon’s former finance director, Russell McBurnie, are still ongoing, the FRC said.
–
Source: Finance Times