The UK’s accounting watchdog today fined PwC £2.5m over claims it failed to properly scrutinize BT accounts following the discovery of a half-a-billion-pound fraud within the telecommunications firm.
The UK’s Financial Reporting Council (FRC) said PwC and former partner Richard Hughes failed to treat BT’s management with sufficient professional scepticism following the discovery of a £512m fraud.
PwC also failed to gather sufficient audit evidence after discovering the fraud in BT Italian operations during its 2017 audit of the firm.
The FRC adjusted the £60,000 fine against Hughes down to £42,000 after the former PwC partner admitted his failings and settled with the audit watchdog.
PwC’s fine was also adjusted down from £2.5m to £1.75m after the Big Four auditor also admitted its failings in the BT audit and settled with the FRC.
Claudia Mortimore, Deputy Executive Counsel, said: “The sanctions imposed in this case, where certain elements of the adjustments following a fraud were not subject to the required level of professional scepticism, underscore this message and will serve as a timely reminder to the profession”.
A PwC spokesperson said: “The FRC’s finding relates to a narrow element of the audit and the regulator has not found that the 2017 Financial Statements for BT were misstated, or that the sum of the BT Italy adjustments was wrong.”
“We have made significant investment in strengthening audit quality in recent years, which has been recognised in improved quality inspection results.”
“We remain committed to maintaining and building on this progress through the delivery of consistently high quality audits.”