PwC hit with record £5.1m fine for 'extensive' misconduct in RSM Tenon audit
The fine comes just three months after PwC incurred another record £5m fine for failures in its audit of social housing firm Connaught
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Your support makes all the difference.PwC has been handed a record £5.1m fine for “extensive” misconduct after admitting a litany of failures in its audit of accountancy firm RSM Tenon.
The Financial Reporting Council said PwC must pay £500,000 in costs and slapped partner Nicholas Boden with a further £114,750 fine for his role in the 2011 audit. The initial £6m fine was reduced to £5.1m after a settlement discount, the FRC said.
Mr Boden and PwC admitted that their conduct “fell significantly short of the standards reasonably to be expected”.
PwC’s misconduct included failure to obtain appropriate audit evidence and failure to exercise sufficient professional scepticism, the FRC said on Wednesday.
The watchdog said: “The misconduct was extensive, comprising five separate admitted acts in relation to the following areas of the audit: 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.“
Proceedings against RSM Tenon’s former finance director, Russell McBurnie, are ongoing.
Baker Tilly acquired RSM Tenon after it collapsed into administration in 2013.
PwC said in a statement: “We are sorry that aspects of the audit carried out in 2011 fell short of professional standards. We cooperated fully with the FRC during its lengthy investigation and accept its findings.”
The fine comes just three months after PwC incurred another record £5m fine for failures in its audit of social housing firm Connaught. Like RSM Tenon, Connaught went into administration shortly after PwC checked the books, leaving creditors out of pocket.
When that ruling was handed out, PwC said: “Since 2010 when the case began, we’ve worked hard to improve our procedures and processes. Audit quality is of paramount importance to PwC and the FRC’s annual audit quality assessments have shown a trend of improvement in our work over several years,”
In June, the watchdog opened an investigation into PwC’s audits of BT after an accounting scandal at the telecoms giant’s Italian subsidiary led to a £530m writedown.
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