PwC and E&Y face audit probe
Multimillion pound accounting irregularities at the Chicago-based distributor of UK musical group Boosey & Hawkes has sparked a probe by Big Five investigators into audit work by Ernst & Young and PricewaterhouseCoopers.
The UK instrument maker and music publisher this month called in an unnamed Big Five firm after auditor E&Y completed its report into the US subsidiary’s loss of control, which forced the group to make a £11.9m write-down on top of a £3.5m bad debt provision in September’s interim results.
Now both E&Y and PwC – which lost its audit work to its rival in 1998 – could face the prospect of legal action for failing to spot ‘fundamentally incorrect and highly misleading accounting entries over several years’.
Irregularities included errors in stock entries, pre-payments and the need for provisioning further debt.
Boosey, who published 40 works performed at this year’s BBC proms, is also considering taking legal action against the dismissed president and chief financial officer.
Chartered accountant group and chief executive Richard Holland said investigators had been called in ‘to review the group’s means of redress against all parties involved’.
Peter Austen resigned as group FD in May, and was replaced in September by John Christmas, described by Holland as an appointment ‘to improve controls within the group’ that now faces end of year losses.