PracticeAuditPwC’s Rock work questioned in the Commons

PwC's Rock work questioned in the Commons

Treasury committee MP asks why Northern Rock audit ignored off balance sheet vehicles

House of Commons Treasury committee vice-chairman Michael Fallon has repeated
concern about PriceWaterhouseCoopers auditing of Northern Rock.

As MPs debated the all party group’s report into banking reform following the
nationalisation of the Newcastle-based bank, the former Tory minister and
opposition Treasury spokesman said that many people had failed during the
fiasco.

Speaking in a Commons debate on Monday afternoon, he said senior management
at the company, non-executive directors, the Financial Services Authority, the
tripartite committee and chancellor Alistair Darling all had to take part of the
blame.

But Mr Fallon added:’We also looked hard at the role of the auditors. I do
not understand how auditors can give a full, fair and firm opinion but exclude
any treatment of the off-balance-sheet vehicles.

‘I find it troubling that Northern Rock’s auditor earned nearly three times
as much in non-audit fees—in consultancy fees—for arranging the securitisation
of Northern Rock’s off-balance-sheet vehicles, as it did for the audit, which of
course excluded them. I find that troubling.’

His comments in the House of Commons followed an Early Day Motion put down by
left-wing London MP Diane Abbott and signed by 30 other MPs expressing concern
about PWC’s role in the Northern Rock collapse.

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