PwC faces a probe into its auditing of Connaught’s books

PRICEWATERHOUSECOOPERS (PwC) faces an investigation into its audit of collapsed social housing repair firm Connaught.

The UK accounting regulator, the Accountancy and Actuarial Discipline Board (AADB), said yesterday it would look at the conduct of auditor PwC, as well as some of its staff, in relation to the preparation and auditing of the group’s results for the year to 31 August 2009 and the six months to 28 February 2010.

PwC said it would “co-operate fully with the AADB investigation”, but declined to make any further comment.

The accountancy firm is believed to have only signed off last year’s financial statement and not the 2010 interim accounts.

The investigation was prompted by a request from the Institute of Chartered Accountants in England and Wales that the events leading up to Connaught’s failure be looked into.

The probe is likely to look closely at the issue of mobilisation costs – costs incurred when companies bid for contracts. The expenses can either be written off upfront, or spread out over the life of the contract. Connaught chairman Sir Roy Gardner announced an internal investigation into mobilisation costs in July to ensure “this policy remains appropriate in its current form.”

PwC began auditing Connaught’s accounts in 2006, when it took the contract from KPMG. KPMG is now administrator of Connaught.

Connaught went into administration in September this year.

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