Audit probes soar
Joint Disciplinary Scheme revenues double as misconduct cases multiply.
Fines and costs paid by accountants found guilty of professional misconduct to the watchdog Joint Disciplinary Scheme almost doubled to £855,000 last year.
But this sum is set to increase substantially in 1999 as a result of the £3.5m penalty imposed on PricewaterhouseCoopers in February over its audits of the corrupt Maxwell business empire.
It could increase still further as a result of JDS investigations into more cases of alleged misconduct involving PwC, and one involving its rival Arthur Andersen.
Accounts for 1998 unveiled yesterday by the JDS indicated that the bulk of its income came from the £750,000 penalty imposed on Stoy Hayward over its audits of Astra Holdings, the defence company at the centre of the arms-to-Iraq scandal. Investigations continue into two accountants formerly on the Astra board.
The JDS said the Astra and Maxwell cases dominated the year, but PwC continues to find itself in spotlight. The JDS is restarting an investigation, stopped in 1993 by the Court of Appeal, into the role of Price Waterhouse, now merged into PwC, in the collapse of the international bank BCCI.
It is also looking at the role of chartered accountants in the collapse of Barings, brought down by trader Nick Leeson, including Coopers & Lybrand, the bank’s former auditor and now also part of PwC. Coopers is also being investigated for its role in connection with a rights issue by Resort Hotels plc, as are a number of accountants employed by the company.
Arthur Andersen is under investigation over its role as auditor of DIY retailer Wickes and the JDS continues to probe Polly Peck audits by Stoy Hayward. An investigation is also proceeding into accountants employed by Queens Moat Houses plc and its auditor Bird Luckin. Complaints have been laid against three accountant directors of Atlantic Computers.
The JDS will eventually be replaced by an Investigation and Discipline Board in a regulatory overhaul.