Sanctions against senior auditor and PwC
The Financial Reporting Council (FRC), UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment, has issued today an announcement to inform that:
PricewaterhouseCoopers LLP (PwC) and Nicholas William Edward Boden, Senior Statutory Auditor and Audit Engagement Partner, have been fined and severely reprimanded after admitting Misconduct in relation to the audit of the financial statements of RSM Tenon Group plc, for the financial year ended 30 June 2011. This follows the delivery of a Formal Complaint by the FRC’s Executive Counsel in connection with their conduct on that audit last December.
PwC and Mr Boden, a member of the Institute of Chartered Accountants in England and Wales (ICAEW), have admitted that their conduct fell significantly short of the standards reasonably to be expected of a Member and a Member Firm and that they failed to act in accordance with the ICAEW’s Fundamental Principle of Professional Competence and Due Care. The admitted acts of Misconduct include failures to obtain sufficient appropriate audit evidence and failures to exercise sufficient professional scepticism.
The Misconduct was extensive, comprising five separate admitted acts in relation to the following areas of the audit: the accrual of bonus payments, certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts, the accounting for a lease, the assessment of the impairment of goodwill, and the calculation of goodwill in relation to a subsidiary.
The FRC’s Executive Counsel has agreed the following terms of settlement with Mr Boden and PwC, which have been approved by the independent Tribunal appointed to determine the Formal Complaint:
- A fine of £6,000,000 reduced to £5,100,000 after a settlement discount
- A severe reprimand
- A sum of £500,000 to be paid towards the FRC’s Executive Counsel’s costs
- A fine of £150,000 reduced to £114,750, after adjustment for mitigating factors and a discount for settlement
- A severe reprimand.
Proceedings against Russell McBurnie, RSM Tenon Group plc’s former Finance Director, are still ongoing.