Tesco auditor PwC cleared by regulators after investigation concludes insufficient evidence to prove wrongdoing

Oliver Gill
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Tesco was fined £129m and entered into a deferred prosecution agreement with the Serious Fraud Office in March (Source: Getty)

The UK accounting watchdog today dropped a misconduct probe into Tesco's auditors PwC, saying there was "not a realistic prospect" wrongdoing could be proven.

While the probe against PwC as a firm has been closed, the FRC said it is continuing its investigations into certain members of staff. This relates to chartered or certified individual accountants.

The FRC did not reveal the names, or specify how many people remain under the microscope.

The Financial Reporting Council (FRC) opened an investigation in December 2014 into the PwC sign-off of annual accounts for the years-ending 2012, 2013 and 2014; as well as the half-year figures to August 2014.

Read more: Tesco fined £129m by Serious Fraud Office for false accounting

It said in a statement: "The executive counsel to the FRC has concluded that there is not a realistic prospect that a tribunal would make an adverse finding against PwC LLP and certain members in respect of the matters within the scope of the investigation."

A spokesperson for PwC said: "We cooperated fully ​during the FRC​'s​ thorough ​investigation and are pleased that​ the FRC has closed it without any further action.”

Black hole

The inquest was one of several undertaken by a number of UK regulators after a £263m black hole was identified in Tesco's financial statements in 2014.

In March, the Financial Conduct Authority and Serious Fraud Office slapped the supermarket with a £129m fine and forced it to pay compensation to shareholders.

Accounting regulators have a five-step process to investigate any wrongdoing by either member firms or individuals.

Read more: Accounting watchdog slaps PwC with £5m fine over audit 'misconduct'

After deciding to investigate and then conducting an investigation, the third step is to conclude whether or not to refer the relevant parties to a tribunal. It is at such a stage that the FRC today decided to halt proceedings against PwC.

The FRC defines misconduct as "an act or omission or series of acts or omissions...which falls significantly short of the standards reasonably to be expected of a member or member firm or has brought, or is likely to bring, discredit to the member or member firm or to the accountancy profession.”

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