PwC pays largest ever uncontested fine to Financial Reporting Council over Cattles audit sign-off

 
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Cattles launched subsidiary Welcome Car Finance in 2003 (Source: Getty)

The Financial Reporting Council (FRC) today fined PwC £2.3m in relation to the 2007 audit of failed sub-prime lender Cattles.

The fines are the highest ever imposed by the FRC for an uncontested disciplinary hearing and only surpassed by the £3m of penalties accepted on appeal by Deloitte in connection with the failure of MG Rover.

Total fines of £3.5m were reduced to £2.3m following mitigation with additional costs to be paid of £750,000. Audit partner Simon Bradburn was fined £120,000, reduced to £75,600 after mitigation.

"PwC and Mr Bradburn have admitted that their conduct fell significantly short of the standards reasonably to be expected," the FRC said in a statement this morning.

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“The substantial fines imposed in this case reflect the seriousness of the audit failings in relation to the critical area of impairment provisioning in a sub-prime lender and will send a strong signal to the audit community of the importance of upholding high standards of professional conduct in audit work," said Gareth Rees QC of the Executive Counsel to the FRC.​

"While the FRC has acknowledged that we had been deliberately misled by third parties, we recognise that certain aspects of this 2007 audit fell short of expected standards," a PwC spokesperson said.

Batley-based Cattles ran into difficulties in 2009 after a £840m black hole was discovered in its accounts.

Auditor PwC refused to sign-off Cattles' financial statements for 2008 and after its share price collapsed attempts to restructure the balance sheet failed.

Read more: Cattles accuses PwC over audit

Last October, PwC and Cattles settled their long-running dispute in relation to the accounting-giant's sign-off of the 2006 and 2007 accounts, just days before the case was due to be heard at the High Court.

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