PricewaterhouseCoopers, Coopers & Lybrand and partner Jon Lander have
been hit by a £1.5m bill for their audit work at TransTec. The bill comprises
£1m in costs and £495,000 in fines for the firms, and a £5,000 fine for Lander,
who continues to work as an audit partner at PwC. The bill for the firm is the
second largest the regulatory watchdog has issued, second-only to fines and
costs handed out over Robert Maxwell’s companies.
The firm and its predecessor admitted it had failed to carry out appropriate
procedures to obtain sufficient audit evidence in relation to TransTec’s
fraudulent accounting, and agreed to revised complaints and a statement of
facts, without facing a tribunal by accounting watchdog the Joint Disciplinary
The complaints centred on a failure by the firm to appropriately check
information provided to them by TransTec’s senior management in 1997 and 1998,
who misled the firm and audit engagement partner Lander over £11m of debit notes
issued to TransTec by its client Ford.
The debit notes issued by Ford, compensation to the car firm over poor work
by TransTec, were not properly disclosed in the accounts and were withheld from
the board, auditors and shareholders.
‘An inappropriate degree of reliance was placed on management representations
and internally generated evidence, and there was a failure in the challenging of
such evidence,’ said JDS chairman Adrian Brunner QC in relation to the audit.
PwC said in a statement: ‘The executive counsel of the JDS withdrew all of
the original complaints against the firms and the audit partner. However, we
accept that we could have done better… in relation to the debit notes.
Accordingly we have accepted the substitution of complaints on that specific
The firm added that it and Coopers had been the victims of a collusive fraud
involving a number of TransTec’s senior management.
Separately, JDS executive counsel Chris Dickson laid complaints this week
against another former TransTec finance director, Richard Parkin, relating to
TransTec’s 1998 financial statements and 1999 interim financial information.
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