Britain’s accounting watchdog, Financial Reporting Council (FRC) on Monday slammed £1.75m fine on auditor PwC after it failed to properly challenge UK telecoms group, BT, once a half-a-billion pound fraud was discovered in BT’s Italian operations.
A news report by Irish Times quoted the Council as saying that that BT’s full-year financial statement for the year ended March 31, 2017, has to be adjusted by £513m due to the fraud.
Commenting on the fine imposed on the audit firm, Deputy Executive Counsel at the FRC, Claudia Mortimore 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.”
PwC said it was sorry that aspects of its audit of BT Group for the year ended March 31, 2017, were not of the required standard.
It added the FRC had not found the accounts were misstated or that the sum of the BT Italy adjustments was wrong.
The audit firm stated: “We have made significant investment in strengthening audit quality in recent years, which has been recognised in improved quality inspection results.”
The fine would have been £2.5m had PwC not admitted to the breaches and settled early.
Richard Hughes, the partner who led the BT audit, was fined £42,000, avoiding a £60,000 fine after admitting to the breach, the FRC said.
The Council also said PwC and Hughes also failed to have a sufficient trail of documents that would allow any experienced auditor to understand the nature, timing and extent of the audit procedures performed.
