PwC fined £1.8m for BT audit failure
The UK’s accounting watchdog has fined PwC £1.75 million after it failed to adequately challenge BT after a £500 million fraud claim was discovered in the telco’s Italian operations.
The fine, given by the Financial Reporting Council (FRC), was lowered from the initial £2.5 million after it admitted to its failures.
The FRC said: “The respondents did not approach the audit of BT’s treatment of the debt adjustments with the necessary professional scepticism and they failed to adequately document their audit work across the entirety of the BT Italy adjustments.”
Richard Hughes, the partner who led the BT audit, was fined £42,000 which was lowered from the initial £60,000.
PwC failed to have a sufficient trail of documents that would allow an experienced auditor to understand the nature, timing and extent of the audit procedures, the FRC said.
The auditor said it was sorry that aspects of its audit that ended on March 31, 2017, were not of a suitable standard.
"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," Claudia Mortimore, deputy executive counsel at the FRC, said in a statement.