PwC in probe over Transtec
PricewaterhouseCoopers is to be investigated by the profession's senior watchdog in a probe into the role of accountants and auditors in the collapse of engineering company TransTec.
The Joint Disciplinary Scheme last week confirmed that following a report from the English ICA, it would examine the role of members and member firms associated with TransTec and subsidiaries, whether as auditors or advisers.
JDS executive counsel Chris Dickson has hired Mazars Neville Russell to supply forensic auditors to look into the case.
The move puts PwC, as auditor, in the direct firing line of the investigation.
A PwC spokesman said the firm had been in communication with the institute.
‘It is not a question about bad auditing,’ the spokesman said. ‘The chief executive and chairman, both chartered accountants, failed to disclose there was a significant claim against the firm to the rest of the board, the audit committee, PwC and other advisers. This was the reason for their resignations.
He added that the firm would assist the JDS with its inquiry as it already had helped the inspectors appointed by the Department of Trade and Industry.
Transtec, founded by former government minister Geoffrey Robinson, collapsed last December with debts of more than £70m after accounting irregularities were discovered. It is under investigation by the Department of Trade and Industry.The case was fuelled by the revelation by former TransTec chief accountant Max Ayris that nearly £500,000 of £1.3m in grants from the Department of Trade and Industry received by TransTec were obtained fraudulently.
A JDS statement said: ‘The referral should not be construed as meaning either that a view has been formed that a prima facie case exists against any member or member firm or that such a finding is likely.’
Former chief executive Richard Carr and finance director Bill Jeffrey are both chartered accountants, and could also face investigation.
Arthur Andersen was also drawn into the controversy following its appointment in January as receiver to Transtec.
The firm was accused of breaking English ICA rules by accepting the work as it had previously assisted in the £32m disposal of the company’s measurement business.
