Martin Flanagan: PwC fine shows auditors are in firing line

Rightly or wrongly, many believe the accountancy profession has been Teflon-coated in they way it has seemingly got off from so many company financial scandals down the years.

PwC has been handed a record fine by the Financial Reporting Council. Picture: Matt Cardy/Getty Images

Banks and their top employees have been lambasted by regulators and MPs pretty regularly for their sins of commission and omission in and since the financial crash. The regulators themselves have got it fairly well in the neck as well from politicians.

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But the accountants who check the books to show they give a true and fair picture of how things stand seem to many to walk away when the detritus hits the fan. Nice work if you can get it when things go well, a tacit get-out-of-jail-free card when they don’t.

Those sceptics will be pleased that accountancy giant PwC has been fined a record £5 million by the Financial Reporting Council (FRC), the industry’s regulator, after admitting misconduct in relation to its audit of accountancy firm RSM Tenon in 2011.

In its hard-hitting findings, the FRC said PwC and senior audit partner Nicholas Boden admitted a series of failures, their conduct fell “significantly short” and included failure to obtain sufficient appropriate audit evidence and failure to exercise “sufficient professional scepticism”.

The FRC described the misconduct as “extensive”, and pointed to five separate admitted acts in relation to the accrual of bonus payments, amounts recoverable on contracts, accounting for a lease, the assessment of the impairment of goodwill and the calculation of goodwill in relation to a subsidiary.

Quite damning stuff. Boden was also fined just under £115,000, both of the fines reduced after settlement. It is not the first time this year that PwC has come under the FRC’s microscope. In June, the watchdog opened an investigation into PwC’s audit of BT following the telecoms giant’s Italian accounting scandal.

Maybe that Teflon protection is wearing a bit thin.

Look out car industry

Car dealer Lookers, which trades as Taggarts in Scotland, says it can handle the slowing car market.

But along with the askance glances at the terms of banks’ funding of car purchases, and Brexit nerves hitting consumers, some of the sheen has come off the industry in the past year.