PricewaterhouseCoopers has been urged to give back its audit fees for Northern Rock work in a bruising grilling before MPs today.
The firm made £1.8m from the bank according to its most recent annual report.
Head of assurance Richard Sexton and banking partner John Hitchins appeared before MPs today as the Treasury Select Committee continued to look into the problems of the Newcastle-based lender.
Sexton was forced to admit that the firm had charged £700,000 for ten 'comfort letters' to Northern Rock, and that it was continuing to work on the sale of the bank, earning more fees.
'You've audited and provided comfort letters for the biggest banking disaster in 150 years,' Tory MP Michael Fallon said.
On the subject of the sale work and fees, Sexton said: 'We have a duty to prepare prospectus-related documents.'
When quizzed on the firm's audit of the bank, Sexton provided little clarity, leaving MPs pledging to pursue the firm further to get more information.
Asked whether the firm should have spotted the imminent problems at Northern Rock when it conducted its most recent audit, Sexton replied: 'The audit review covers the financial statements and it included all relevant information.'
Sexton maintained that the aim of an audit was to 'provide comfort' about the information contained in the financial statements and not to consider the internal controls or the operational risks.
Panel members repeatedly asked why Northern Rock's liquidity issues were not brought to the fore but Sexton shot down any suggestion that this issue should have come under the umbrella of the audit.
'The information that was required to be audited was thoroughly audited and was there for all to see.'
Asked about the non-audit work PwC carried out, he said: 'We were providing comfort on securitisation issues at the request of the company.'
The firm has been criticised for earning huge non-audit fees on top of the audit fees, and in particular for working on areas that were critically involved in the bank's problems: securitisation and wholesale funding.
PwC earnt £1.1m for its audit of Northern Rock last year, and £700,000 for the non-audit work.
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