U.K. Regulator Opens Probe Into PwC Audits of BT's BooksBy
Investigation covers fiscal years ending in 2015 through 2017
PwC was BT’s auditor during an accounting scandal in Italy
The U.K. Financial Reporting Council opened an investigation into PricewaterhouseCoopers LLP’s audits of BT Group Plc over three years following an accounting scandal in the carrier’s Italian unit that led to a writedown of 530 million pounds ($687 million).
The review will cover fiscal years ending in March 2015 through 2017, the council said Thursday in a statement. The action is designed to investigate and potentially sanction breaches of auditing requirements.
The regulator’s investigation could help clarify PwC’s role in the matter and determine where oversight fell short in BT’s Italian unit. BT said this month it would replace PwC with KPMG following the discovery of years of allegedly false transactions. BT was due to change auditors within the next few years, but the crisis led the company to accelerate its timetable.
The council can issue fines and censures against individuals and auditing firms over misconduct. PwC was fined 2.3 million pounds plus costs over its audit of the subprime lender Cattles last year in one if the FRC’s biggest penalties, while one of the firm’s partners was told to pay 75,600 pounds and received a “severe reprimand.”
PwC said it will continue to cooperate fully with the FRC and that audit quality is of “paramount importance to the firm,” according to a statement emailed by a spokesman.
“The FRC’s annual reviews of our audit work, policies and procedures show a continued trend of improvement in our work and we use the FRC’s insights, together with our own reviews, to continuously improve how we deliver high-quality audits,” PwC said. BT declined to comment on the FRC’s announcement.
— With assistance by Suzi Ring