World Economy

PwC Fined $6.6m by UK Financial Watchdog

PricewaterhouseCoopers LLP was fined £5.1 million ($6.6 million) for misconduct over its audit of RSM Tenon Group Plc in the largest-ever sanction issued by the UK accounting regulator.

The financial reporting council announced the fine, along with penalties against Nicholas Boden, a senior PwC audit partner. The misconduct related to an audit of RSM Tenon’s accounts for the year ended June 2011. RSM Tenon was a professional services firm that went into administration in 2013, Bloomberg reported.

The record penalty comes only three months after PwC incurred another record fine for misconduct over its audit of Connaught Plc, a FTSE 250 company that went into administration in 2010. The FRC issued a £5 million sanction against the auditor over the Connaught work in May, marking the then-largest-ever penalty from the regulator.

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.

“We are sorry that aspects of the audit carried out in 2011 fell short of professional standards,” a PwC spokesman said in an emailed statement. “We continually review and update our audit processes in response to both internal reviews and external inspection findings.”

PwC would have been fined £6 million over RSM Tenon if it hadn’t received a settlement discount, the FRC said Wednesday. The auditor must also pay £500,000 toward the FRC’s costs.

A spokeswoman for PwC said Boden is a partner at the firm and declined to comment further.

The FRC said proceedings against RSM Tenon’s former finance director, Russell McBurnie, continued.

RSM Tenon Group was liquidated after it went into administration. Some of its subsidiaries were bought by accountancy firm Baker Tilly, which then rebranded as RSM UK, a spokeswoman for RSM UK said by email.

It follows its rival, KPMG, which was fined the previous day more than £4.7 million by the US Securities and Exchanges Commission over the audits of Miller Energy Resources, an American oil and gas company.

A KPMG spokesman said: “This matter is related to audit work performed in 2011. KPMG is committed to the highest standards of professionalism, integrity and quality, and we have fully co-operated with our regulators to reach a resolution.”

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