PwC reported to FRC for removing information

PWC HAS BEEN REPORTED to the Financial Reporting Council (FRC) regulator for removing information in a report into an aircraft company that had been accused of inflating its order book.

In a letter to the regulator, MP Jim Shannon accused the firm of removing information from a report compiled by the firm in 2007 into Magellan Aerospace Corporation. The report was commissioned by the Canadian aircraft parts company to look into allegations from an employee that its order book had been inflated, the Daily Telegraph reports.

The PwC report, which claimed there was no wrong-doing or inflated numbers at Magellan, was submitted at an employment tribunal brought by Little following his dismissal from the company days after making the allegation. Magellan claimed this was because Little was rude and disruptive to colleagues.

However, it emerged that there had been an earlier draft of the report, which included a paragraph stating that “financial control … is poor and needs to be improved: this is particularly acute given that Magellan is a public company”.

Another extract missing from the final report said there had been “accounting adjustments made with insufficient supporting analysis; inadequate understanding or documentation of balance sheet provisions; poor control over individual projects from an accounting perspective; [and] project sales volumes, revenues and costs are not reviewed with sufficient frequency or rigour.”

A PwC spokesman said: “We refute entirely the suggestion that a change to a PwC report was made in order to render some advantage, or favour, to Magellan Aerospace Corporation, or that such [change] was made to the detriment of any individual.

“PwC’s client was the audit committee of Magellan, by whom we were engaged to prepare a confidential report in relation to certain specific accounting matters. The paragraph in question was removed at the request of the audit committee, as it did not address the accounting matters which PwC were instructed to review. However, the same points were included in PwC’s covering letter to the audit committee that accompanied the report.”

He added that PwC had no involvement in the tribunal proceedings.

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