The UK accounting regulator has cleared PwC and KPMG of any wrongdoing over its auditing of two financial institutions during the height of the 2008 financial crisis.
The Financial Reporting Council announced this week it had closed its investigation into PwC for its role in reporting Barclays Bank’s compliance with client asset rules.
Last month, the FRC cleared KPMG of any wrongdoing over its auditing of HBOS in 2007, when the bank was given a clean bill of health only to collapse months later and be forced into a rescue by Lloyds TSB. The accounting regulators concluded the accountancy firm could not have foreseen the bank’s problems.
In a statement issued to the British stock exchange this week, the FRC said it closed the investigation into PwC after its Executive Council decided there was “no realistic prospect a Tribunal would make an adverse finding against PwC in respect of the matters within the scope of the investigation”.
The FRC was investigating PwC’s reporting to the then regulator, the Financial Services Authority (FSA), in its role as auditor to Barclays Bank spanning the 2007 to 2011 financial years to 31 December.
A previous investigation by the FRC into PwC and its work with Barclays in relation to its preparation of reports FSA for the periods 2001 to 2009, was closed in 2013.
The FRC launched a second investigation into PwC’s compliance reporting for Barclays following the banks fine of £37.8 million in September 2014 for “endangering £16.5 billion of clients’ custody assets”.
At the time the regulator said the fine was imposed to reflect “significant weaknesses” in systems and controls at Barclays’ Investment Banking Division which meant clients risked incurring extra costs, lengthy delays or losing assets if Barclays had become insolvent between 2007 and 2012.