UK fines PwC $8.9m over audit breaches

Oluwanifemi Ojo
Oluwanifemi Ojo

PricewaterhouseCoopers, also known as PwC, gets a fine of $8.9 million from UK’s regulatory body over “serious breaches” discovered in Babcock International’s audits.

Reuters reported that the Financial Reporting Council said the fine is the penalties related to the multinational’s audits failure of Babcock’s accounts up to the end of March 2017 and 2018.

There was also audit failure on the accounts of one of its subsidiaries in the latter year.

Meanwhile, FRC reduced the penalty by 25% to 5.6 million pounds because it was rectified earlier.

Reuters reported that auditing firms have lately been closely monitored following the slanders linked to top Britain’s best-known companies including retailer BHS and builder Carillion.

According to the report, some of the breaches discovered on PwC’s audits of Babcock are continued failures to challenge management and get sufficient relevant evidence.

The report also laid emphasis on the company’s lack of competence, care and diligence.

The regulatory body also found that there was no proof that the audit team took time to read  a 30-year contract with lifetime revenue of 3 billion pounds written in French.

This means the audit team cannot read French and did not find ways to translate.

A PwC spokesperson said, “We’re sorry that the work in question was not of the standard required and that we demand of ourselves.”

According to Reuters, Babcock, which was not a party to the FRC probe, claimed it had reviewed its contracts and balance sheet and had initially revealed its findings in April 2021, leading to a write-off of about 2 billion pounds.

“This established an appropriate baseline for the financial performance of the group,” a Babcock spokesperson said.

The regulatory body also fined two PwC partners namely, Nicholas Campbell Lambert and Heather Ancient a sum of  200,000 pounds and 65,000 respectively.

However, it was reduced to 150,000 pounds and 48,750 pounds respectively.

Reuters reported that the FRC’s probing into PwC’s statutory audits of the Babcock group financial statements for 2019 and 2020 is still ongoing.

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