Record audit fine for PwC

Tim Wallace
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BIG FOUR auditor PwC was fined a record £1.4m by an industrial tribunal yesterday for failing to scrutinise accounting practices at JP Morgan.

PwC’s reports to the Financial Services Authority from 2002 to 2006 did not explain that JP Morgan was keeping clients’ cash with its own, breaching accounting rules.

The bank failed to ring-fence an average of £5.5bn during each year, and was fined a record £33m in 2010.

The Accounting and Actuarial Discipline Board (AADB) took action against PwC’s UK division.

The AADB had been pushing for a fine of anywhere between £5m and £33m, whilst PwC believed £0.5m to £1m was more appropriate.

As the auditor admitted responsibility, apologised, immediately ensured the appropriate training was carried out and because no bank clients lost out as a result, the fine was well below the level the AADB pushed for.

“We are pleased that this matter has now been concluded. We regret that one aspect of our work on the private client money report to the FSA fell beneath our usual high standards,” said PwC.

The previous highest fine came in 1999 when Coopers and Lybrand were charged £1.2m for their auditing of Robert Maxwell’s media group.