PwC fined a record £5.1m by the FRC over RSM Tenon audit
PwC and partner Nicholas Boden have been severely reprimanded and fined over admitted misconduct relating to RSM Tenon audit
The Financial Reporting Council (FRC) has severely reprimanded and slapped PwC with a record fine of £5.1m (reduced from £6m), over misconduct relating to their audit of RSM Tenon for the financial year ending 30 June 2011.
Nicholas Boden, senior statutory auditor and audit engagement partner and ICAEW member, has also been fined £114,750 (reduced from £150,000) and severely reprimanded.
PwC must also pay £500,000 towards the FRC Executive Counsel’s costs.
PwC and Boden admitted they had fallen short of expected standards and failed to act in accordance with the ICAEW’s Fundamental Principle of Professional Competence and Due Care. The admitted misconduct included failing to obtain appropriate audit evidence and failing to exercise sufficient professional scepticism.
The “extensive” acts of misconduct also included specific actions in the following areas of audit: “the accrual of bonus payments, certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts, the accounting for a lease, the assessment of the impairment of goodwill, and the calculation of goodwill in relation to a subsidiary.”
In a statement, PwC said: “We are sorry that aspects of the audit carried out in 2011 fell short of professional standards. We cooperated fully with the FRC during its lengthy investigation and accept its findings.”
“We continually review and update our audit processes in response to both internal reviews and external inspection findings. Audit quality is of paramount importance and our annual audit quality reviews show year-on-year improvements.”
In December of last year the FRC agreed on a settlement fine of £26,500 with RSM Tenon’s ex-CEO, Andrew Raynor.
The FRC said proceedings against Russell McBurnie, RSM Tenon Group’s former finance director, are still ongoing.
RSM Tenon was a member of RSM International, but in 2013 RSM Tenon’s shares were suspended and the company went into insolvent administration
Meanwhile, Tokyo-based tech giant Toshiba just narrowly escaped delisting as PwC finally signed off on its accounts.
