The Financial Reporting Council, the UK accounting regulator, levied a fine of £5,1 million ($6,6 million) on PricewaterhouseCoopers for “severe misconduct” over its audit of professional services firm RSM Tenon Group Plc in the largest-ever sanction issued by the FRC. Penalties were also levied against Nicholas Boden, a senior PwC audit partner.
The misconduct is linked to five specific audit areas, ranging from the accrual of bonus payments to “certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts”.
This fine comes months after PwC was the recipient of the Financial Reporting Council’s previous highest penalty, with the group charged £5 million in May over its audit of Connaught in the run-up to the social housing group’s collapse in 2010.
The FRC has opened a number of investigations involving well-known companies in recent years. The watchdog started a probe into PwC’s audits of BT Group Plc in June, following an accounting scandal in the carrier’s Italian unit, while KPMG Audit Plc is facing scrutiny over its work with fashion house Ted Baker Plc.
PwC would have been fined £6 million over RSM Tenon if it hadn’t received a settlement discount, the FRC said. The auditor must also pay £500,000 toward the FRC’s costs.
The FRC said proceedings against RSM Tenon’s former finance director, Russell McBurnie, continued.
The fine on PwC follows only a day after its rival, KPMG, was fined more than $6,2 million by the US Securities and Exchanges Commission over the audits of Miller Energy Resources, an American oil and gas company.